If you have considered purchasing in the past but the rent vs. buy analysis did not justify purchasing, I encourage you to revisit the math. Lots has happened in the last year, including a big drop in mortgage rates. One year ago interest rates being offered for a mortgage with less than 20% down were around 3.69%. Today that has dropped to 1.69%. So what does that mean for those comparing renting vs. buying? These low rates have made home ownership far more attractive in two ways:

Lower Payment = Lower Carrying Costs Of Home Ownership

When interest rates drop, mortgage payments decrease. This can have a big impact on your overall carrying costs as a homeowner.

Example: $300,000 mortgage amortized over 25 years in a 5-year term

At 3.69% = $1,528/month

At 1.69% = $1,226/month

= $302/month drop in mortgage payments

The interest rate drop equates to $300 less in monthly carrying costs.

Less Interest = More Equity Faster

When interest rates drop, more of your mortgage payment goes to paying off your principal versus paying off your interest costs. You pay off more of your mortgage and build equity faster.

Example: $300,000 mortgage amortized over 25 years in a 5-year term

At 3.69% = $51,417 interest paid; $40,266 in principal paid = $259,734 loan balance after 5 years

At 1.69% = $23,206 interest paid; $50,349 in principal paid = $249,651 loan balance after 5 years

= $10,083 more equity after 5 years

The interest rate drop means you will pay off over $10,000 more of your mortgage loan in the first 5 years.

If you want to look at how you can take advantage of this mortgage market to become a homeowner, give me a call!