Home Connection: Watch mortgage interest rates closely

Guest Commentary
May 4, 2008

Comments Print Email

Buyers, economists, television reporters and various publications are trying to forecast the future of the real estate market. Right now, it's so hard to say if real estate values have hit bottom or not.

What many buyers don't realize is that they may have the same monthly payment for a home, even if they buy it cheaper. For example: If a buyer bought a home today with a loan amount of $190,000 at 6 percent, the principle and interest monthly payment would be $1,139. Paying less next month and lowering the loan to $180,000 at 6.5 percent would have a principle and interest payment of $1,139. Exactly the same payment.

The unknown factor is: what will rates do? Since the beginning of the year, mortgage rates have dropped 0.5 percent and then come back up 0.5 percent. Nobody wants to overpay for a home, but even at a lower price the payment could still be the same; it depends on the rate. Buying now at a lower interest rate may cost you less than if the price drops.

So with an eye on the rate, watch for what appeals to you and remember the fundamentals: price, condition and location.



Chris McGrath is a broker associate with Brokers West Real Estate and currently serves on the board of directors of the Greeley Area Realtor Association.