When it comes to the Orange County housing market, buyers seem to focus solely on the listing price and tend to overlook one of the most important factors of the home buying process…which is interest rates.
Luckily for all the current buyers out there, interest rates have now lowered to a 3.5% rate, which will bring huge savings in the long run.
WHY DO INTEREST RATES MATTER WHEN IT COMES TO AFFORDABILITY?
Interest rates matter because they greatly influence monthly mortgage payments and what buyers can afford overall. Interest rates also influence what buyers can afford when getting pre-approved.
Buyers need to stop focusing on how high values are and look at the whole picture when it comes to affordability. Home values are not going to lower any time soon so there is no reason to wait for the market to change. Waiting for prices to decrease and by not taking advantage of the current low interest rates would be a major missed opportunity.
BREAKDOWN OF SAVINGS
In November 2018, a 30-year mortgage climbed all the way up to 5%. This slowed the market significantly. Now rates are at 3.5% which is down 30% from last year. For a $700,000 loan, that is $614 per month savings or $7,373 per year.
Prior to the Great Recession, interest rates were above 6% in 2007. A $625,000 home with 20% down had a monthly payment of $3,111. Today at 3.5%, the monthly mortgage payment is only $2,245, an $866 per month savings or over $10,000 per year!
Also, many buyers tend to forget that a 20% down payment is not a necessity. There is FHA financing that only asks for 3.5% down. Do not miss out on buying your first home because of purchase price alone! Low interest rates will save money in the long run.
Sari & Team has partners and contacts in the real estate industry who can help you get pre-approved so you can get started with the home buying process. Our experience working in Orange County over the years in a constantly changing market has given us a competitive edge in helping our clients. For more information on the current state of the Orange County housing market, please contact Sari Ward at (949) 558-3100 or email at [email protected].