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.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
