Why You Should Buy When Rates Are Low

The decision to buy a house is a big one with many factors. People often assume that the most important factor is the listing price of a home, but interest rates, taxes, and maintenance costs also factor into the affordability of a specific home. A home that might be perfectly in your price range at first glance, might not be once everything is considered. A major determining factor that often gets overlooked is the mortgage interest rate.

Did you know, in most cases, it’s actually more cost-effective in the long run to purchase a home when interest rates are low rather than just the listing price is low? It feels a little counterintuitive but let’s break it down.

House Price Vs. Interest Rate: Example Scenario

In the example above, purchasing the house for $50,000 more actually results in a lower monthly payment and a lower amount paid during the life of the loan. If you paid off the loan in 30 years, you would have paid a total of $455,149, including your down payment. With $105,149 of that being solely interest payments. While if you purchased the home at the lower list price, your total price is $484,715. With $184,715 of that being solely interest payments.

In this example, the example on the right with the lower list price is $29,566 more over the life of the loan.

Interested in learning more about purchasing a home? Talk to one of our agents to see when it makes sense to buy for you. We won’t rush you into buying if it doesn’t make sense for your situation. Remember, the best time to buy a house is when you’re ready.