By now I think most people understand that home prices in Missoula have been influenced by the national recession and that mortgage rates are at an all time low. However, with all the talk about rates and home prices it can be hard to determine how these changes can affect your investment.
Relationship between rates and price: In the past when rates have come down prices tend to trend up. Buyers can now buy more for the same monthly price as they could at a higher rate. When rates go up prices come down because the buyers don’t have the same buying power.
The advantage that buyers have in today’s real estate market is that rates and prices are low at the same time maximizing their purchasing power.
6% vs 4.125% – Buying Power!
Let’s look at a home loan of $350,000 and how rates change the investment.
A loan of $350,000 at 4.125% interest rate will cost a buyer about $ 1,696 a month. Over the course of 30 years you will be paying almost $260,659 of interest by the time the loan is paid off.
A loan of $350,000 at 6% interest rate will cost a buyer about $2,098 a month. Over the course of 30 years you will be paying almost $ 405,434 of interest by the time the loan is paid off.
The difference in interest rates for the same price loan will save you $402 a month and $144,775 over the course of 30 years. Low interest rates and great prices can save you a lot of money for your new home in Missoula.
Provided by Golf Savings Bank, Missoula, MT
Happy buying Missoula!