Stix & Stones

Mortgage Rates Better than the $8,000 Tax Credit!

Posted on Monday, August 9th, 2010 at 9:06 pm.

The continued decline in mortgage rates this month is creating new opportunities for purchasers to help themselves in the long term like never before. Currently, mortgage rates for FHA loans (loans commonly used by 1st time buyers or others with limited down payment funds) are hovering around 4.25% for a 30 year fixed rate loan. Just for comparison, last year that same rate was almost 6.0%. Historically, any rate under 6.0% is considered very good so 4.25% is simply amazing. So you say that you don’t plan on staying in your next home for 30 years? If you get an FHA loan it’s assumable by the next purchaser which means they will be willing to pay you more for your home for the right to steal a loan at 4.25% when current rates are more like 7%.

What does this mean to the average home buyer? The total amount of interest that you would pay on a $225,000 loan at 6.0% is $260,636 but that very same loan at 4.25% would only have total interest charged of $173,469. That’s a whopping $87,167 less in interest which is equivalent to not making over 5 years of payments on the loan at 6.0%. For those of you that didn’t take advantage of the $8,000 federal tax credit, don’t worry. The savings on your interest rate is equivalent to receiving the $8,000 tax credit more than 10 times over the next 30 years.

Finally, realize that because of the expiration of the $8,000 tax credit, buyers are in control of the market today like never before which means it’s possible to get a really good deal on a home and pay hundreds of dollars less per month for that same home than you would have a year ago.

Don’t let this opportunity pass you by! It is really a once in a lifetime opportunity. You can attend a free Home Buyer Workshop class in August or September to learn more but don’t delay because these super low rates could go away at any moment. If there was ever a time to get off your rear and check out the housing market, NOW IS THE TIME. For registration check out www.HBWDenver.com.