“The time has come” the walrus said……to cut the federal interest rate.
Except in this story, the walrus is Jay Powell, the federal reserve chair. And yes, he made that announcement this past week.
Which is a great thing for homebuyers!
One of the greatest hurdles for prospective homeowners to overcome these days is the interest they'll will be paying on their mortgage….and it makes quite a difference.
A 250k home that’s locked into a 3% mortgage….will give you a $1600 payment. (Principal, interest, taxes, insurance included)
Compared with the current rate of 6.5% which will bump that to $2,100!
That’s $6,000 more annually....a $180,000 increase over the course of the loan!
But is that $500/month were put into a Roth IRA over the course of the loan, you’d be looking at $1.1M tax free! 😳
Now, that said, the 2-3 percent loans we saw during the COVID ages likely aren't returning anytime soon.
So if you’re waiting for those to make a comeback while paying rent to the tune of $1,300-$1,400/month…..you might be waiting a while.
(While also spending almost $20k/year to your landlord)
It's very prudent to consider the LONG term payoff that could result from buying a smaller home with a lower payment.
If you see yourself buying in the next 3-6 months, the FIRST step is to get pre-approved for a loan.
I’lll put you in touch with my mortgage guy who can have you approved within 24 hours.
Hit me up!
David Fox
The Black Belt REALTOR
734-679-0174
Woodhaven, MI