1% Could Make the Difference

I asked Heather Myott a Mortgage Advisor with Coldwell Banker Mortgage, what would be the impact of waiting before purchasing a home. Waiting for what? Let’s say for home prices to come down. She gave me a great example to demonstrate that waiting could mean a decrease in purchasing power. Let’s take a look:

Example:
Purchase of $200,000 with 3.5% down payment at mortgage interest rate of 5.200% for a 30 year fixed rate loan = $1,078.33

Same scenario as above with an increase to the rate of 1% for a total mortgage interest rate of 6.200% = $1,202.75

Total increase in monthly payment of $124.42 or more than $40,000 over a 30 year loan.

To purchase at the same monthly payment as what you could with today’s rates in an economy with higher rates, you would be buying a home for around $179,000. That is a decrease in purchasing power of $21,000 or over 10% less of a home!

For more information contact:
Heather D. Myott,
Mortgage Advisor
Tel (802) 238-1704
Fax (856) 917-2188
Heather.Myott@mortgagefamily.com
Licensed in Vermont #6038