Do these really low interest rates I keep hearing about really save that much money on a home loan? I have gotten this question a bunch lately, people wondering if all they are hearing lately about interest rates is really worth paying attention to or just another media story blown out of proportion. The answer is absolutely and completely yes. These low interest rates can save a ton of money!!!!!
Take as example a purchase price of $255,000 with 3.5% down payment, a very common loan these days. With an average interest rate of 6%,that by historical standards is still considered low, monthly payments including tax, insurance and mortgage insurance would be $1,780.17.
If you then look at an interest rate of 4.5% which is standard right now, even on the high side some days, your monthly payment including all taxes and insurance would be $1546.84. That is a savings of $233.86 per month and a savings of $2,806.32 per year. If you own the home for an average of 5 years, that is a savings of $14,031.60.
As you can see, these ratestranslate to a huge savingsand shouldn't be taken lightly. They aren't going to stay around forever, so if you are considering buying, now is definitely the time!!!
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