Ricky Lang Realtor

A lil matchy matchy

How many bedrooms would your dream house have right now? I want to know!

The simple answer to this question is that refinancing your home will reduce your monthly cost as well as the amount of interest you pay over the 30 year mortgage, or however long you have left on that mortgage.

The average interest rate in the year 2000 was 8%. In 2021 it was about 3%, that’s a huge difference!

So for example If you’re looking at a home in 2000 valued at $500,000 at 8% interest, with all other things being equal, you’re looking at a monthly payment of $4,044 and paying $796,000 in interest over the life of a 30 year loan. Take that same house in the year 2021 with a 3% interest rate. Your monthly payment is going to be $2,745 and total interest paid = $328,000. That’s a huge difference in your monthly payment and total interest paid. Imagine what you can do with that money!

Have you ever heard the phrase “time in the market beats timing the market”? The only thing that can be guaranteed in the housing market is that the cost of homes will only continue to increase over time. There may be a dip here and there but over the long term you will see an increase in costs. That's why it is best to buy as early as possible and ride through the market.

In March, inflation hit 8.4%, and this is more than double the targeted range. Therefore, the federal government is moving to raise interest rates, which is a restrictive monetary policy to slow the circulation of money within the economy. With less money in circulation, it will discourage a sharp increase in prices.

It means that the same house that you saw a month ago is now more expensive due to the increased interest that will need to be paid.This drives down the buying power of the everyday consumer.