I can remember my parents paying around 18% on there mortgage back in the day. Truly a dismal prospect. The interest rate you pay, has a huge difference on the amount of your monthly payment for you home. In fact, not only does it affect how much you can afford, but it may make the difference whether you can purchase or not at all. Interest rates for now, continue to be at historic lows. The chart below, provided by the California Association of Realtors, is designed to help you understand how much even a small fluctuation in interest rates will affect your payment. So do yourself a favor, and don’t wait too long to buy.
This Newsletter is full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.
This month’s issue includes topics such as:
“Your Home Isn’t Selling Because…”;
“The Low-Down On Big Down Payments”;
“What Buyers Really Want In A Home”;
“An Open House Can Close The Deal”;
“Seven Seller Slip-ups That Send Buyers Packing”;
Plus a roundup of April real estate activity as well as much more advice and information.
With the tightening of financing over the past few years, buying a vacation home is becoming a little more difficult. For those who have the cash though, it is a good time to make the purchase with home prices as low as they are. Above is an article from the New York Times on Financing a Vacation Home. If your ready to take the plunge, I would love to lend you my services in Tuolumne County, or refer you to Realtor in a vacation home market anywhere else.
When it comes to purchasing big ticket items, society in general tends to asks 2 questions. How much does it cost? and What are my monthly payments? The big problem is that we tend to leave out the question, How much will the total cost be when it is paid off?
Not considering the 3rd question, has put most of America into trouble at some point or another, including myself. Your best bet is to pay off credit cards every month, in other words, live within your means. Don’t use credit for things that do not have lasting value (like dinner, concerts).
There are of course things that are just too big to not use credit for, such as a car or a house. In both cases, a shorter loan term may cost slightly more, but the savings in interest can be huge. The chart below is a good example of interest savings. When taking out a home loan, many of us need 30 years to pay it in order to afford the payment. If you do not need it however, I urge you to go for the shorter term. If you already have a long term loan, consider a refinance to a shorter term. Another option is to make additional principal payments on your current loan, you would be surprised how little extra you need to pay to double your principal payment, especially in the early years.