by Yvette Betancourt
Interest rates jumped one percent within a week in the month of June 2013. Talking with the mortgage lenders I have done business in the past, told me that same thing - the era of historical low interests are O-V-E-R!!! The same week that interest rates jumped a whole percent, I read an article on my LinkedIn network that rates would continue to rise by the end of the year. Some analyst dared to mention six percent interest rates.
But what does all these numbers mean? How will it effect buyers and sellers?
It all comes down to numbers. For sellers, the interest rate affects the refinancing of their home.
For buyers, it means a change in your purchase price range as price of homes continue to rise.
Let's look at three Case Studies that will reflect a mortgage payment at three different interest rate:
Case Studio #1 at 3.5% rate
Conventional Loan
Purchase Price of Home: $450,000
10% downpayment of: $45,000
Loan amount for home: $405,000
Closing Costs in month of July
Fixed Cost: $7,893
Pre-Paid Cost: $4,267
Total: $12,160
Grand Total Due at Closing of Escrow (downpayment + closing costs): $57,160.00
Payment Info:
Principal and Interest: $1,818.63
Haz. Insurance: $131.25
M. Tax: 462.00
PMI: $178.88
PITI: $2,590.76
Interest rates jumped one percent within a week in the month of June 2013. Talking with the mortgage lenders I have done business in the past, told me that same thing - the era of historical low interests are O-V-E-R!!! The same week that interest rates jumped a whole percent, I read an article on my LinkedIn network that rates would continue to rise by the end of the year. Some analyst dared to mention six percent interest rates.
But what does all these numbers mean? How will it effect buyers and sellers?
It all comes down to numbers. For sellers, the interest rate affects the refinancing of their home.
For buyers, it means a change in your purchase price range as price of homes continue to rise.
Let's look at three Case Studies that will reflect a mortgage payment at three different interest rate:
Case Studio #1 at 3.5% rate
Conventional Loan
Purchase Price of Home: $450,000
10% downpayment of: $45,000
Loan amount for home: $405,000
Closing Costs in month of July
Fixed Cost: $7,893
Pre-Paid Cost: $4,267
Total: $12,160
Grand Total Due at Closing of Escrow (downpayment + closing costs): $57,160.00
Payment Info:
Principal and Interest: $1,818.63
Haz. Insurance: $131.25
M. Tax: 462.00
PMI: $178.88
PITI: $2,590.76
Case Studio #2 at 4.5% rate
Conventional Loan
Purchase Price of Home: $450,000
10% downpayment of: $45,000
Loan amount for home: $405,000
Closing Costs in the month of July
Fixed Cost: $7,893
Pre-Paid Cost: $4,433
Total: $12,326
Grand Total Due at Closing of Escrow (downpayment + closing costs) : $57,326
Payment Info:
Principal and Interest: $2,052.08
Haz. Insurance: $131.25
M. Tax: $462.00
PMI: $178.88
PITI: $2,824.20
Case Studio #2 at 6% rate
Conventional Loan
Purchase Price of Home: $450,000
10% downpayment of: $45,000
Loan amount for home: $405,000
Closing Costs in the month of July
Fixed Cost: $7,893
Pre-Paid Cost: $4,683
Total: $12,576
Grand Total Due at Closing of Escrow (downpayment + closing costs) : $57,576
Payment Info:
Principal and Interest: $2,428.18
Haz. Insurance: $131.25
M. Tax: $462.00
PMI: $178.88
PITI: $3,200.30
The increase of 1% in interest rates is $233.44 mortgage payment difference and $250.00 of closing cost difference. If interest rates rise to 6%, the difference is increase by $609.54 mortgage payment and $416 of closing cost difference.
Is now a good time to enter the real estate market?
Contact me for more information about today's real estate market.
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