The Truth About Mortgage Rates: Where we've been and where we're going. . .

Written by: Amanda Thompson

If you’ve been seriously thinking about buying a home, then you’ve been thinking about mortgage rates.  This April was the perfect time to buy.  Why do I say that?  Because this April  interest rates were at an all time low of 3.4%  (according to freddie mac).   Now they’re creeping back up.  Today,  May 31st they’re 3.8%.

In dollars and cents: According to Trulia, the median home price in Los Angeles County is $405k.  If you put the standard 20% down, on a home that price you’ll need a loan for $324,000.

 IF you bought a home in April, when interest rates were 3.4%, with a 30 yr fixed mortgage you would pay $193,276.51 in total interest.

 IF you buy a home TODAY, while interest rates are 3.8%, with a 30 yr fixed mortgage you will  pay $220,156.86 total interest.  

 

THATS A DIFFERENCE OF $26,880.35!! or as I like to say  a new car.

 

IF you wait until interest rates are 5%, with a 30 yr fixed mortgage you will pay, $302,148.74 total interest.  That means you’ll be spending  $81,991.88 more than if you buy  TODAY.  That could have been my college tuition.  That’s why educated buyers are taking advantage of these low rates .   

 

Well I am here to tell you that Ben Bernanke, Chairman of the Federal Reserve, stated that as early as June interest rates could rise to 4%.

 

Bernanke also stated the Fed would keep pumping money into the economy until the unemployment rate is at a solid 6.5%.  Which he believes will take place in 2015.  That means they wouldn’t raise  rates significantly but you could see them go up to 5% by the beginning of 2014, after all they went up almost half a percent in the last month!

 

So if you are a buyer on the fence about if you should buy right now or wait, here's my advice:

If you'd rather give your money to the bank, than take a vacation, or buy a new car, I suggest you buy later. 

If you want the most for your money, BUY NOW!!