To answer this question, let's compare today's historically low interest rate of 4-1/2% to a 7% interest rate.

Why use 7% as a comparison rate?  In 1971, the Federal Government started tracking mortgage interest rates.  Since then, 75% of the time, interest rates have been 7% or higher.

The average sale price of a home in York County is approximately $149,900.  A home purchased for approximately $149,900 with a 3-1/2% down payment results in a mortgage amount of $144,654. 

For a 30-year, fixed-rate mortgage for $144,654 at 4-1/2%, the monthly principal and interest payment (excluding taxes and insurances) is just $732.94.

Using the same 30-year, fixed-rate mortgage of $144,654 with an interest rate of 7%, the monthly principal and interest payment would be $962.39.  That's a difference of $229.45 per month, or $27,534 over ten years, for the same mortgage amount!

Here's another benefit – low interest rates will allow a homebuyer to buy a more expensive home without paying a higher monthly mortgage payment. 

At 7%, the monthly principal and interest payment of $962.39 covers a mortgage amount of $144,654.  At 4-1/2%, the same payment covers a mortgage amount of $189,938.  In this example, the buyer can purchase the more expensive home today without spending more money. 

Contact a REALTOR® to take advantage of the incredible opportunity offered by today's interest rates.


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