All good things must come to an end. That’s how the saying goes anyway. Today this concept applies to our 40-year, low mortgage interest rates. I’ve published this chart before, but it bears a repeat visit.
Mortgage rates have been steadily climbing, from a low of 4.5% around November 27, 2009 to above 5% on December 22, 2009. For the past two months I’ve been warning that this will eventually happen. It’s not because the economy is recovering; it isn’t recovering. The reason mortgage rates will rise to 6% or above, soomer rather than later is because that is the “natural” market.
What does this mean to you? Well, maybe nothing but then again, maybe everything. If you refinanced your Louisville home since rates have been down under 5%, you’re a winner! If not, I recommend that you speak with your loan specialist as soon as possible.
If you’re considering a move, there’s no time like the present. Here’s an example from a standard mortgage calculator:
Just as an example, let’s say you are borrowing $180,000.00 for 30 years with an interest rate of 5.000%. If the value of your home is $200,000.00, your property taxes $3,000.00 per year and your insurance is $1,500.00 per year, you can expect to be making a total payment of $1,416.28. This is because you need to pay $966.28 toward the actual loan, plus $250.00 for real estate taxes and $125.00 toward insurance.
Now up the interest rate to 6% and see what it looks like. The payment jumps to $1,529.19 which translates to an extra $40,647.60 in interest payments over the life of the loan. That’s not pocket change.
Have a Merry Christmas!