Mortgage interest rates are historically low. This has been the mantra for a few years now. In 2009, rates were in the 5% range. Most people never imagined interest rates into the 4% range, but it happened in 2010 and then again and 2011. Rates haven’t seen the 5’s since, and in fact since 1st quarter 2012 rates haven’t been above 4.0%. Rates are planted squarely in the mid 3% range, and new home buyers and people refinancing have taken advantage all year. Everyone realizes lower rates means less of a lower payment. But most consumers likely do not realize how “powerful” interest rates really are.
The average home sales price in Northern Virginia is often between $375k and $425k, and a $2,000 a month mortgage is quite common. The chart below shows how much impact interest rates have on buying power (I did some rounding, and these calculations do NOT take into account insurance or property taxes).
So what’s the take away for you? Well it depends on your situation and what you are trying to do. Obviously based on rates alone it is a fantastic time to buy or refinance. But current rates is only one data point in making a life decision. If you have questions/concerns or are considering a change in your current mortgage situation (whether a refinance or a home sale/purchase) feel free to give me a call or email. I would be happy to help you make a logical decision that is right for you and your family.
Happy Holidays Everyone!!! Be safe, and here’s to a fantastic 2013!!!