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.... more