Interest Rates are 4.5% – will you take advantage or miss out on this opportunity?

by Robert Mack on June 29, 2010

in Irvine Real Estate

low interest ratesInterest rates today came out at a historically low 4.5%!  If you don’t take advantage of this amazing rate now, you may kick yourself in the butt…..

There are two types of buyers right now….the type of buyer who sees the long term value of a low interest rate or the type of buyer who is only concerned with one thing….the price they buy at.  I’m here to tell you that getting a lower interest rate now and not worrying about the price will save you thousands of dollars in the long term.  What are you most concerned with, telling your friends and family what a fantastic price you got on your new home or are you more concerned with paying less for your home in the long run?

Let’s take a look at a simple example.  In Irvine, Orange County the average home that sells is roughly $550,000.  For argument sake, let’s focus on a buyer who is obtaining conventional financing with a 20% down payment.  With this in mind, the loan amount would be $440,000.  At an interest rate of 4.5%, the buyers principle and interest total payment would be $2,229.42 which is a payment that is $268.87 lower than the payment at a 5.5% interest rate which we had about 2 months ago.

Many buyers are sitting on the fence waiting for home prices to fall an additional 5% before they buy without putting any weight on what may happen to the interest rates.  Let’s just say that home prices fall 5% in the next 3-4 months, however now the interest rates have gone back up to 5.5%.  Well the buyer is happy because they are buying at the price that they want to buy at, but let’s look at the big picture.  At this price with 20% down and a 5.5% interest rate, now the overall total payment is $2,373.36 for a lower priced home.

What makes more sense to you?  Buying a $550,000 with a 4.5% interest rate which results in a payment of $2,229.42 or would you be happier buying a home at $522,500 with a 5.5% interest rate which would result in a payment of $2,373.36?  Would you feel comfortable buying a home lower in price but paying $143.94 more per month?  It just doesn’t make sense!  Stop jumping over dollars to pick up pennies.  If buying a home is a goal of yours in the near future, look at the big picture and stop focusing on price when the interest rate will ultimately determine your monthly payment.

To get pre-approved to see what you can afford, or just to learn more about the buying process, contact Robert Mack @ 949-209-7309 Today.  Don’t be one of those buyers who looks back in several months only to wish you bought now!  Summer Inventory is here, so don’t waste anymore time….the market will not wait for you!

To start your search on your own go to – and get new homes emailed directly to you everyday!

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Post by Robert Mack

Robert has written 727 articles.

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