RISMEDIA, May 18, 2009-Whether now is the precise time to purchase your dream home or not, there are certainly more than just a few good reasons to purchase-especially for first time buyers, according to John B. Bearden, president & CEO of GMAC Real Estate.
In May, 30-year mortgage rates of 5 percent were widely available and down from January’s already low 5.8%, and rates are down a full two percentage points from August of last year.
“What many consumers are not hearing is that despite a turbulent real estate market, mortgages are at historic lows,” said Bearden. “Compared to just last summer, 30-year fixed rate mortgages are about a point and a half lower.”
So what does this mean-especially for a first time buyer? Buying power. A lot more buying power.
For instance, with the lower rates, a home buyer could save $257 per month ($3,084 per year) on their payment toward a $200,000 mortgage versus if they had recently obtained a 30-year fixed interest rates compared with August of last year. On a $200,000, 30-year fixed rate mortgage at 5%, the monthly payment would be $1,073 – compared with $1,330 for a 7 percent mortgage, the national average for a 30-year fixed rate last summer.
According to national mortgage statistics, here’s a breakdown of how much further a home buyer’s dollar goes on a $200,000 mortgage as rates continue to hover at historically low levels:
7 percent mortgage: $1,330 monthly payment (rates in August 2008)
6 percent mortgage: $1,199 monthly payment (rates in December 2008)
5 percent mortgage: $1,073 monthly payment (rates in May 2009)
“When you combine record low interest rates, low prices and the federal government’s tax credit for first time home buyers, and the mortgage interest deduction, there are certainly a lot of positive reasons to make the case for buying versus renting right now,” Bearden said.
For more information, visit www.gmacrealestate.com.