Interest Rates

If you're new to investing and real estate and don't know the first thing about interest rates, here's an obvious tip: the higher the interest rate, the more expensive it's going to be. This sounds obvious, but let's look into this a little deeper. High interest rates mean your payment will be just a little higher, but you will have to pay back more on the money you borrow. For instance the difference in payments on a $100,000 loan amount at 6% or 7% is just $66. per month - not a big difference. However, after 360 payments (30 yrs), that adds up to an additional $23,000+ you will have to pay.

By paying just one extra monthly payment a year (13 instead of 12), you can knock that 30 year mortgage down to approximately 20 years, a 15 down to 10, etc. - Wow! On a $100,000 mortgage, that is a savings of $60,000.

Another good rule of thumb is that affordability increases if you use an adjustable rate mortgage (it's usually easier to qualify this way too). There is no guarantee what direction interest rates will go, despite the forecasts of the experts, we are at all time lows, rates are likely to go up. Now is a great time to buy. With appreciation and the lowest rates in many years, the window of opportunity is now.

Make your financial decision based on your situation today including your budget, your needs and your future plans. Locking in with a fixed-rate mortgage assures your loan payment will never go up. Don't obsess over all the details and miss a good real estate deal though. Waiting and hoping for lower rates is not necessarily a smart move. You will likely end up paying a higher price in the long run. Refinancing is always an option in the event that interest rates come down. We can give you a list of lenders we have had good luck with, to help you reach your goals - Call your KYLandSales team member toll-free 888-2-KY-LAND (888.259.5263) or email ClientsFirst@KYLandSales.com for more financing information.