With interest rates at historic lows, we are seeing most buyers take advantage of low cost financing by obtaining a mortgage for the purchase of their beach house. In many cases, even those with funds available to buy in cash are opting to finance their purchases. Low interest rates also mean that buyers can afford more house for their money. Today we have a guest blog post from local Mortgage Broker Jason O’Keefe discussing the impact of interest rates on loan costs.
When looking into financing the purchase of a property, one of the most important terms of your loan is the interest rate. It is the key component that drives how much interest you will pay to your lender over the life of the loan you obtain.
Say for example you take out a 30 year loan for 400k with an interest rate of 3.75% , you end up paying a total of $326,886 in interest to your lender. However, if your lender issues you a lower interest rate of 2.75% the total amount of interest paid to your lender is reduced to $247,867. That change in rate results in a significant savings of $79,019….
Of course rates vary depending on your credit score, down payment, loan program, and other factors but you can see that it’s imperative to be rate conscious and make sure you are getting the best rate available out there at the time. That is one of the key benefits of working with a broker who can shop your mortgage to multiple lenders across the country, as opposed to limiting yourself to just one or two local lending institutions.
With rates at historically low levels it’s currently a great time to obtain financing for a new home purchase or refinance your existing loan.
In today’s fast moving real estate market it’s very important to obtain a prequalification letter from your lender before making an offer on a property, in fact most realtors require it in order to set up an appointment to view a home.
Always happy to answer any financing questions that may come up, as there are a lot of moving parts when going through the process of purchasing a new home.
Jason D. O’Keefe
InterContinental Capital Group | NMLS # 60134
265 Broadhollow Road, Suite 220
Melville, NY 11747
Thank you to Jason for guest writing on our blog! We hope this was helpful and are happy to answer any questions.