Date

What It Really Means To Have Historically Low-Interest Rates

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on pinterest
Share on email
Have you wondered what it really means to have historically low-interest rates?

Let’s take this example…

Let’s say we have a $200k, 30-year fully amortized, fixed-rate mortgage, which has a monthly principal and interest-only payment.

In the 1980s, the average rate interest rate was 12.7% and created a $2,166. Monthly mortgage payment.

Now in 2020, that same mortgage loan, with a 3.45% interest rate, the monthly payment is as low as $894!

That’s a difference of $1272 per month in savings!  And over $15,000 every year for the life of the loan.

YEARINTEREST RATE %MONTHLY PAYMENT
1980s12.7%$2,166.00
20203.45%$894.00

Now consider that the average value of real estate appreciation across the US is anywhere from 3 to 5 % annually.

This $200k home is creating $6 to $10k in equity.  In just 5 years your $200k home could be worth $243,330, which is $43,330. more dollars than you had when you bought the home!

Granted, right now, many lenders are requiring a bit higher of a credit score to qualify, as long as you have some savings tucked away, a regular and historically verifiable income – now is such a great time to buy a home!  As you have seen, it will save a good amount of money in the long run!!

More

Articles