There are so many advantages to owning your own home, and even with prices on the rise, affording a new home may be easier than you think due to continued record-setting low interest rates.
In fact, according to housingwire.com, interest rates have been below 3 percent for more than 18 consecutive weeks.
They further reported that the average U.S. mortgage rate for a 30-year fixed loan fell one basis point this week to 2.71 percent, the lowest rate in the survey’s near 50-year history.
The average fixed rate for a 15-year mortgage also fell last week to 2.26 percent from 2.28 percent.
Here’s a comparison of how much more buyers can afford with the difference between a 4 percent interest rate versus a 3 percent interest rate (and rates are even slightly lower right now).
On a $250,000 mortgage, 30-year loan and a 4 percent interest rate, the principal and interest rate payment would be $1,193.54.
Compare that to the same loan terms, but a 3 percent interest rate, the payment would be $1,054.01—a difference of $139.53 per month.
If you look at this from the perspective of affordability, if you qualified for a $250,000 mortgage last year at 4 percent interest, you can now afford closer to a $284,000 purchase price.
With rents increasing and year-round rentals becoming increasingly harder to find, it’s a good time to seriously consider homeownership, which provides benefits such as tax advantages, building equity, ability to do what you want with your home and fixed principal and interest payments.
