THE FUTURE OF MORTGAGE RATES


There’s much talk and concern recently about mortgage rates and how that’s affecting potential buyers. The traditional thought process is to avoid buying now because “rates are high”. However, if residential buyers were thinking like an investor thinks, they’d weigh all of the options and run the numbers to help make a decision. Here is a common scenario that emphasizes how a home buyer should view their purchase like an investor thinks.

  • Purchase price $ 500,000

  • 20% down payment 100,000

  • Loan amount 400,000

  • 30 year fixed loan

  • Principal & Interest at 4% $ 1,903 per month

  • Principal & Interest at 5.5% 2,261 per month

  • Difference due to rate is 358 per month

So, you decided to rent for a year hoping rates could come down within the year. Let’s use $ 2,500 per month rent for our example. 12 months x $ 2,500 = $ 30,000 is total rent for a year.

If you obtained a mortgage per the example above, you’d be paying about $ 358 more per month. But if you look at the $ 30,000 in total rent paid divided by 358, you’d be ahead of the game for at least 83 months, or close to 7 years. If rates go down in the next 7 years, you could have the option to refinance to a lower rate; or you may end up selling your house in 7 years or so. Either way, you’re building some equity along the way. That’s how to analyze a purchase decision like an investor.

I can help you find a mortgage that best fits your needs based on income, timeline and risk aversion. Call me today at 772-285-8822 or email frank@pharushomemortgage.com Frank Lillo www.pharushomemortgage.com





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