The Opportunity in Mortgage Interest Rates

Whenever I need an update on the current real estate and mortgage rate environment, I turn to my trusted experts at Miracle Mortgage Corp. Today, we have a special treat from Miracle Mortgage President John Doan, who lets us in on his keen insights straight from the mortgage front. Take it away, John.

The Opportunity in Mortgage Interest Rates 

By John Doan, President, Miracle Mortgage

Today, consumers are finding deals on all kinds of goods and services, as businesses struggle with decreased demand. It was announced recently that consumer spending now makes up 71% of our GDP, which is the highest percentage ever. With all of these deals in the market and a tough economy, can there really be a peak in the real estate market?

When it comes to home purchases, consumers most closely review the price they pay at the time they make their home purchase. They will negotiate price, and may even walk away from the deal for a couple thousand dollars difference. But let’s be clear, the biggest impact on real estate’s total cost over the long term is one thing… interest rates.

Assume a buyer bought a $500,000 home with 20% down at 6% for 30 years. That buyer will pay $963,353 during that 30-year period, with $463,353 to cover interest alone. At just a 1% drop in the rate to 5%, the total 30-year cost of the same home would be $873,023, with $373,023 representing interest. That’s a discount of $90,330.

Financing your real estate at favorable rates is the key here and, fortunately, rates never have been lower. With an increase in the federal debt likely to continue for the foreseeable future, the government will have to lend more and more money. And with the increased supply, they’ll have to offer higher yields to those buying Treasuries.

Observe the correlation between 10-year government debt and mortgage rates since 1972 in the chart below. Here, it is easy to see the long downward trend that’s now reached all-time lows. 

If you currently are in an adjustable-rate loan and your rates are over 5%, allow us to do a free assessment to provide you options for your real estate financing needs. Imagine your payment going up 20%, 30% or 50% overnight just because you did not review your options?

Do your due diligence and call Miracle Mortgage today at 888.536.3453, or email me for your free, no obligation assessment. You may have the opportunity to provide yourself with long-term security for your home or other real estate investments.

Note: Miracle Mortgage Corp. is a sponsor of my radio program, Doug Fabian’s Wealth Strategies.