Homebuyers have more purchasing power in today’s real estate market due to low-interest rates.
Low-interest rates mean that current homeowners can save on their mortgage by refinancing. It also means that anyone interested in buying a house has more buying power. Now is a great time to buy a home because your monthly housing budget can go further.
According to Fannie Mae, the 30-year fixed-rate mortgage will average around 3.18% through 2020. Ten years ago, the average mortgage interest rate was 4.69%
What does this mean?
If you brought a house for $300,000 in Bowie MD, with an interest rate of 3.18%, and you put down 20% you would pay approximately $1,150.00 per month. This calculation includes principal, interest, tax, and insurance.
If you brought the same house in Bowie, MD, with an interest rate of 4.69%, and put down 20% you would pay approximately $1,350 per month. This includes principal, interest, tax, and insurance.
That is a difference of $200 a month, so you can see how it really adds up.
Now let’s look at this another way. Say you budgeted $1,350 a month for a mortgage payment. Instead of the $300,000 home, you could have purchased ten years ago now you could afford a home worth $350,000. That could be a larger home or a new zip code! Keep in mind, these calculations are based on a home in Bowie MD and it includes principal, interest, taxes, and insurance. These calculations could vary depending on the home you purchase.
Looking at how low-interest rates are today you have more buying power. The one thing you should know is that mortgage interest rates fluctuate, and no one can predict when they will change. If you have any thoughts on buying or selling now is the time to do it. You would not want to miss out on an opportunity that you can afford right now.