How will this impact your decision to buy or sell real estate in 2022?
As most people know, Interest rates are (and have been) extremely low for the last few years. But did you know, there is a big difference between, say 3%-4%?.
Just for a comparison (keep in mind we haven’t seen this low of purchase prices in about a decade in the PNW), a 1% difference in mortgage rates on a $200,000 home with a $160,000 mortgage can increase your monthly payments almost $100!. Of course, that is with a traditional 20% down loan. If you were to buy a $200k home with 10% down you would most likely have an extra $85 PMI (mortgage insurance) added on to your payment.
Example A: $200,000 Purchase Price. @ 3% interest for 30 years w/ $10,000 down payment = $1135 ($801 + $85pmi + $250 PTax).
@4% interest rate= $1240 per month ($907 + $83pmi +$250 PTax)
Example B: $200,000 Purchase Price. @3% interest for 30 years w/$40,000 down payment = $1008 ($647 + $83pmi + $250 PTax).
@4% interest rate= $1097 per month ($736 + $83 + $250 PTax)
Interesting difference. Are these two examples showing the difference between 3% and 4% with minimal down and 20% down enought to impact your decision? Or is the choice more about the higher purchase prices more important to you? Leave me a comment and tell me why!
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