If you're shopping for a condo in Hoboken, you know that mortgage rates have crept up in the last few weeks from their recent low in March of 4.8%. Since then rates have inched up to 5.3%, and I've read many predictions that they will continue to go up, in the near future to at least 5.5% including Lawrence Yun himself, chief economist NAR.
Here are a few articles relating to the recent rises
On a 100,000 mortgage what does that look like? Assuming you are getting a conventional mortgage with no points, here is the scenario.
$100,000 at 4.8% looks like $480 a month.
$100,000 at 5.3% looks like $530 a month, and
$100,000 at 5.5% looks like - you guessed it, $550 a month.
If you had locked in your financing at 4.8 percent, you are saving $70 a month which over 5 years saves you $4200.
Might not seem like much, but what if you were borrowing $300,000?
4.8% = $1440
5.3% = $1590
5.5% = $1650
Now the savings really start to add up. In this scenario the savings is $210 a month, $2520 a year and $12,600.
What does this mean?
Well, if you were waiting for a condimium you saw to reduce by $10,000 or accept your bid of $10,000 lower than what the seller is willing to accept, then by waiting, you've unfortunately paid that money by financing it over just 5 years.
Bottom line: if you've found a home, consider rising interest rates and compare it against the money you are looking to save off of the price to see if truly you are saving or just financing the savings.
April so far has 20 condominiums under contract. Numbers for this past week will be reflected in the next few days' pending notifications.
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