Why is a low interest rate a big deal, anyway?

Why is a low interest rate a big deal, anyway?

Why are agents making such a commotion? I mean, it's not that great, is it?

Think again.

I'm going to give you some calculations from mortgagecalculator.com. I don't think most people realize just how much interest they pay in a mortgage scenario over the long haul, and why it takes so many years to build equity in a home.

Here's the scenario:

$150,000 mortgage

We'll assume 0% down payment through the USDA Rural Housing loan.

First calculation - 4.5% interest (similar to right now).

Second calculation - 6.5% interest (similar to rates just a few years ago).

Finally, we'll use the default tax and PMI rates.

.....

....

..

.

Ready?

At our current rates, you'll pay approximately $329,860.07 total for the $150,000 borrowed - that's $116,110.07 in interest alone!

At our OLD rates, you'll pay approximately $397,566.73 total for the $150,000 borrowed - that's $182,254.23 in interest, a whopping $66,144.16 more than now, not to mention $188.07 a MONTH higher payment!

Do you really want to waste all that money? Wouldn't you love an extra $188 a month? What about the fact that the average home price is down 11% in the last 5 years (Data from NKYMLS comparing average sold price in August 2006 ($155,000) to average sold price in August 2011 ($138,000) for a downward adjustment of 11%)? You can get more home for your money, a lower monthly payment, and save literally thousands upon thousands of dollars in interest. Why not call a Realtor (R) today?