We’ve been asked numerous times over the past month: “Why should I purchase a home now when the tax credit expired at the end of April?”
The answer is simple. Interest rates have fallen dramatically since April 30th. The following example illustrates how interest rates can dramatically increase your buying power. Think about it in terms of a $250,000 loan. The average interest rate in April was 5.34 percent, meaning that the principal and interest every month on a 30-year fixed loan would be $1394.48 and cost $471,111 over the life of the loan. The average interest rate is currently around 4.78 percent, meaning that the average principal and interest payment on the same loan would be $1308.64 per month and cost $502,012 over the life of the loan.
By purchasing the same home right now versus in April, you would save $86 per month and close to $31,000 over the life over the loan. Since the homebuyer tax credits ranged from $6,500-$8,000, it is obvious that a lower interest rate will save you much more money in the long-run.
Since there was a mad dash in April to purchase a home by the April 30th deadline, there is less competition out there right now, meaning that you have more homes to choose from and you have more negotiating power.
If you are a Denver homebuyer, don’t miss your opportunity to take advantage of these once-in-a-lifetime interest rates. For Denver mortgage lender recommendations, or for information on the Denver real estate market, please contact TeamCox Realtors at 303-400-6060.
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