Aug 20 2015 11584 2

Aug 20 2015 11584 2

Hi there... Michele here with more about real estate.

Today (September 21, 2015) we'll look at why INTEREST RATES are important. If you're like 90% of us, you're going to be financing your home purchase. This means borrowing money to help you pay for the home. However, you do have to pay for the opportunity to use someone else's money, and that's in the form of interest.

Great news! Currently interest rates are still at a very LOW percentage level. Will it always be like this? Unlikely. There's already discussion at the Federal Reserve about increasing the rate.

There's a direct relationship between interest rates and how much you can afford to spend on a home. Here's what I mean. The lower the interest rate, the more you can afford to spend on monthly payments. For example, if you can pay $1000 a month in principal and interest, at a 4.00% you can afford to buy about $220,000 home. If interest rates go up to 4.5%, your same $1000 a month will only buy you a $200,000 home. As you can see, this is a pretty significant difference and can mean an extra bedroom, a different neighborhood, a pool, a larger lot!

Oh, and what does "principal" mean? That's how much money you're actually borrowing. If the home price is $200,000, and you put a down payment of 5% ($1000), the amount you're borrowing, or the principal, is $190,000, and that's what you'll be paying interest on. And also, you'll be paying back the principal.

There are other charges associated with your monthly payment. You may have heard of PITI. We've already talked about principal and interest. The "T" stands for taxes. In general your property taxes are included in your monthly payment. The amount varies based on the neighborhood and the value of the home. The second "I" is insurance. An example of insurance is the payment required if you borrow more than 80% of the total value of your home's purchase price. This is mortgage insurance, and gets paid every month until the principal becomes less than 79% of the value of your home. More about that in a future blog!

If you're looking for a lender I have several trusted lenders and I'd be happy to give you my list. Call me at 480-734-4109, or send me a note at the email below and I'll get you the list.

Till next blog!

Michele at MKHomesAZ.com or MKHomesAZ@gmail.com

480-734-4109


Stephen Cotton Headshot
Author:
Phone: 623-236-5843
Dated: September 21st 2015
Views: 241
About Stephen: ...

Property Search








RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Peoria Home With Pool - Summer is just around the corner
Phoenix Home With Pool - Hello everyone, Summer is just
Home Improvements That Are Not Profitable - A fresh coat of paint, polished
Top 10 Small Improvements That Increase Your Homes Value - Selling your home in a competitive

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

The Cotton Group
2920 N LITCHFIELD RD
Goodyear, AZ
480-725-3877
6028005125

Other Locations