Let’s start with interest rates and loan payments and the like. The ice cream? Read on…we’ll save the best for last!
OK, so what’s all of the talk about interest rates lately? Well, they’re making history because they’re as low as they’ve been since such things were tracked. Why is this important to you as a homeowner? Or potential homeowner? Or investor?
Well, let’s look at an example: a $300,000 loan, 30-year fixed. We’re going to compare 3.25% to 4.25% (4.25% is a very respectable interest rate as well, by the way, when looked at from a historical perspective). We’re not going to talk about qualifying for a loan or what YOUR rate might be, by the way – that’s another discussion.
On a $300,000 dollar loan, your payment at 4.25% versus 3.25% goes up 13% – an extra $170 (or so) per month! Over the life of the loan, this is about $61,000! That’s a lotta dough-re-mi.
But wait… there’s more! There are many things you could do with the money of course. But let’s just say that every month for 30 years you put that $170 in an account paying a mere 3% (perhaps a stock index fund?). In 30 years, you would have about $99,000 in that account. Now, I don’t know how much value $99,000 will have in 2050, but I do know this: it will be more than 0! So, you still got your house today and some bonus money in 30 years. Go ahead… get yourself something nice. (By the way, if you can average 5% instead of 3%, your end number will be $141,000!)
As for the ice cream, that was just my attempt to make you bear with me through all of these numbers. If you feel slighted, please call me. I’ll deliver (west coast only, please). Robert Thompson, Lic’d broker in Oregon and Washington. [email protected]
Robert E Thompson Real Estate Group. Keller Williams Realty Portland Premiere. Each office independently owned and operated.