Mortgage Rates are like Gas Prices

Here are some interesting facts about our market and mortgage rates here in Louisville, KY.
People get nervous about the market and everything surrounding it. We normally don’t see a big
Increase in home values; therefore, we don’t normally see the huge drops that you see when you look
nation-wide.  People worry a little bit more about interest rates.  On a $100,000 loan a .5 % difference in
interest rate would equal $30 in regards to the difference in the payment.  On a $150,000 loan a .5 %
would equal $45.  Sometimes people worry about rates going up but we always laugh and equate
them to gas prices in regards to them changing every day.   No one likes to pay for gas when it goes up but you still have to have it.   Just like you still have to pay to live somewhere.  When you look at it on a $150,000 loan, being a $45 difference monthly payment because the rate is .5% higher, is that $45 per month really going to keep you from buying your dream home? For some it may but for most it wouldn’t.  If it does make a difference for someone I suggest paying off a small credit card that has a $45 monthly payment.   That will help balance out the increase in rate. 
What’s interesting is we see a lot of out of town people coming in and purchasing investment properties here because the market is so stable compared to the rest of the country.  There are a lot of things to consider! Lending options are still really good, rates are still really good when you look at what we’ve had over the last 25-30 years.   Home prices are definitely increasing.  I think we will be seeing a bit of a pullback in the housing market because we’ve had so many quarters of larger than normal appreciation. Other regions across the US are already seeing this.  If houses stay on the market a little bit longer than what they currently are we are still way above what the averages are.
If the timing is right buying a house has numerous benefits.    I always like to share this story with potential home buyers:  I have a rental property that someone just moved out of recently. They were there for a full 10 years! They were paying $800 a month. If you do the math, $800 over 10 years is $96,000 that they paid to me. I estimate that out of that $96,000 they probably paid the balance down by about $45,000 and also in that time frame appreciation was probably $60-65,000. When you look at home ownership, it isn’t all about interest rates but about building wealth. The sooner you can purchase a home, the less money you’re throwing away on rent.