Mortgage rates are very low now. On a $200,000 mortgage, a 1/8 of a point change translates to less than $15 a month. They may drop lower, especially with the economic troubles in Greece. But our federal spending is getting out of control and that might be a sign of increasing inflation.
Buy now and lock in a great rate.
It is possible that rates will drop 0.25% however, I would not count on it. It is possible rates would increase 1% and more. That is very likely depending on a few factors coming into play.
At the risk of being a cut and paste this one time. It's just far too much information and there is no other way to rewrite it. So here it is again............
Fact: From 1964 @ an average of 5.45% to 1977 @8.96% the rates fluctuated somewhere in between.
Fact: From 1978 @ an average of 10.35% to 1990 @ 10.48% the rates got as high as 18.45% and fluctuated between those numbers.
I am not a mathematician, nor am I an expert in lending practices. What I can tell you is that I lived through this period of time and it is not a selling tactic and it didn't happen hundreds of years ago. I find that since we're in the year 2000 and something, anything quoted from the 1900's or before is not very well received by people who didn't experience it. The bottom line is that no one knows for sure what is going to happen to the interest rates. Can you afford your dream home if the interest rates rise? Is being a home owner important to you? Only you can answer these questions and only you know the details of your finances.
The following is a chart of the difference that you would be paying for the same home at different interest rates. This is for P&I only- IT DOES NOT INCLUDE TAXES, INSURANCE AND PMI IF REQUIRED.
HOME PRICE $200,000.00
DOWN PAYMENT $7,000 (3.5%)
30 YEAR FIXED RATE
INTEREST RATES: 4.5% = PAYMENT OF $977.90
6.0% = PAYMENT OF $1157.13
7.0% = PAYMENT OF $1284.03
8.0% = PAYMENT OF $1416.17
9.0% = PAYMENT OF $1552.92
10.0% = PAYMENT OF $1693.71
The DIFFERENCE in your payment from lowest to highest would be $715.81 per month!
Now, as I said earlier no one can predict the future, but because it really wasn't that long ago that interest rates reached as high as 18%, I think it's only fair to remind you and other buyers of what the possibilities are.
A voting member of the Fed stated earlier this month that the low interest rates were forcing Americans NOT to save and this one member wanted to see rates increase. He's in a 1-9 minority. But you never know the influcence he has.
My advice - lock in a great rate today with a local lender.
Any good-sized increase in rates would drop property values further right now...and I don't think many want to see THAT.