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Monday, January 28, 2013

Why Interest Rates Should Pique Your Interest




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We wanted to remind you how important it is to take a good hard look at where interest rates are right now and consider whether that changes the real estate equation for you.  When I started buying properties in the nineties, interest rates were in the 8s, but today they are in the 3s to 4s.   Now you can get a 30-year fixed rate for 3.5% or less with some getting nearly 3% rates recently.  These rates have helped made home-buying affordable.

The interest rate makes a big difference.  Consider buying a $300,000 property with a typical 8% interest rate from the nineties, and your monthly mortgage payment will be $2,201.29.  Ouch!  But if you bought the same property today and took advantage of the rates, such as 3%, your monthly payment would drop by nearly $1,000 to $1,264.81.  If you’re on the fence about whether the real estate market is a good idea for you, think about those rates creeping up to say 5% and what that does to the same payment—it would go up by almost $400 from the 3% example.    

Keep in mind what the lower interest rate does for building up equity in your home.  With the high interest rates in the nineties, only about 7 or 8% of each mortgage payment covered principal versus interest. But with a 3 to 4% interest rate, about one-third of your payment goes to principal.   Imagine that!  Also, your total payment would be only 70% of what it would have been back in the nineties, and in absolute terms, your payments to principal are much greater, so you can accumulate equity much more quickly.  The rate at which you do so today in comparison to other times in history is remarkable.   

If you’re thinking about buying, now is the time to take advantage of the low interest rates.  A 30-year fixed-rate mortgage hovered at a record-low rate during 2012, but the rates won’t last forever, so there’s not a better time to buy than now. 

If you’d like to talk about getting into the market, call us today at 202-290-1313 or email us at carlos@enggarcia.com.

Monday, January 14, 2013

Low Interest Rates Mean Faster Equity



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You know that today’s historically low interest rates mean it’s a great time to buy a home, but did you also know that these rates in the 3-4 percent range can translate into building home equity more quickly than ever?

It’s true! That’s because lower rates result in a high percentage of each mortgage payment applied to your loan’s principle.

It’s amazing how things have changed since I started in the real estate business in the 1990s here in the Washington, D.C., area. Back then, interest rates were in the 7-8 percent range and about 7 or 8 percent of each mortgage payment went toward principle.

Today, 30 percent or more of a payment is applied to principle. Not only that, payments, in absolute dollars, are about 70 percent of what they were in the ’90s. It’s much easier now to afford the home of your dreams.

Call or email us, and we will be happy to discuss the implications of these low interest rates for you as a home buyer or seller. Truly, it’s a great time to buy investment properties or a primary residence.