Murfreesboro TN Homes: Tennessee

How to SAVE $16,462 On Your Next Home!! Buy Your Dream Home Now!

Interest rates have dropped to historical lows and have remained low for several months.  In August 2010 the national average for a 30-year fixed rate mortgage hit 4.36%.  This rate was lower than it had been in a half century!  Rates began to increase slightly hitting 4.95% in February 2011.  As of today,  August 4, 2011, the national average was back down to 4.37% with lower rates to be found. 

Our current market is a once in a life time opportunity for home buyers!  

No one knows how long interest rates will stay at these rock bottom rates.  However, all indicators point to an increase in the national average on the horizon.  This is crucial for home buyers to consider because even tiny increases in the mortgage rate translates into big differences in monthly payments and huge differences in the life of the loan payments!  

The table below shows the impact the interest rate has on a home buyer purchasing a $200,000 home with a 10% downpayment of $20,000.  This table reflects a 30 year fixed rate $180,000 30 year mortgage.

Realtors and Lenders don’t have a Magic 8 Ball but we do know that...

Mortgage rates are at rock bottom levels and won’t stay there forever!

 

 

 

 

 

 

 

INTEREST RATE

4.36%

5.19%

6%

7%

8%

Monthly Payment & Interest

$897

$987

$1,080

$1,198

$1,321

Difference in monthly payments

 

$90

$182

$300

$424

Total interest paid over the life of the loan

$142,964

$175,424

$208,509

$251,116

$295,480

Interest saved over the life of the loan

 

$32,460

$65,545

$108,152

$152,516

 

 

When you look at this chart is it easy to see how even a slight uptick in interest rates can increase the monthly mortgage payment significantly!  An increase from 4.36 to 5.19 caused an increase in the monthly mortgage payment of $90!

 

Another interesting way to view this information is to consider how much more home an individual can purchase when interest rates are low.  Let’s say you want your monthly mortgage payment to be less than $900 per month so we will use the same figure of  $897.  The homebuyer now has two options.  They can increase the cash downpayment needed to close, or buy less home!  

 

 

An increase from 4.36 to 5.19 will result in the home buyer bringing an additional $16,462 to closing


Or, they can lower the maximum purchase price to $183,538 instead of $200,000.  

 

 

 

 

 

 

 

 

INTEREST RATE

4.36%

5.19%

6%

7%

8%

Amount of Mortgage for $897 monthly payment

$180,000

$163,538

149,612

134,825

122,246

Downpayment required for $200,000 Home

$20,000

$36,462

$50,388

$65,175

$77,754

Purchased Price of Home with $20,000 Downpayment to keep payment $897

$200,000

$183,538

$169,612

$154,825

$142,246

 

 

If you are in the market to purchase your first home or considering selling your current home and buying a larger home, the market is highly favorable!  In essence, the affordability of home prices combined with these historically low interest rates creates the perfect storm for home buyers! 

We never know when the bottom of the market will be, or if interest rates will go lower.  However, it is hard to imagine that mortgage rates would go lower than they are now.  Another factor to consider when playing the waiting game, is the market is trending up!  Foreclosures were down for the first half of 2011 and the market shows signs of recovery with home values slowly moving up.  This increase in home prices would offset any slight drop in mortgage rates.  

The guidelines for lending are tougher than they were before but I believe this is great for our long term housing market.  


If a home buyer has good credit, there is money available! 

If you are considering buying a Murfreesboro TN home, or selling your current home in Brentwood, Franklin, Smyrna, Murfreesboro, TN or the surrounding area, please contact me at 615-566-3789.  


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Please visit:  SOLDONTN &  SherriWellborn.com 

Sherri Wellborn, Keller Williams Realty

Reliant Realty

640 Broadmor Blvd
Murfreesboro, TN 37129

615-566-3789 CELL

615-225-9600 Office

Comment balloon 1 commentSherri Berry • August 03 2011 02:42PM
How to SAVE $16, 462 On Your Next Home!! Buy Your Dream Home Now!
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