I remember when I bought my first home in the mid 1980’s. I was so excited, the interest rate was at the bottom of the double digits, considering what the early 80’s had to offer with rates in the high teens. I had friends who purchased in Brooklyn, NY in the early 80’s and were paying almost 17% for their mortgage. The interest rate for my first home was just above 10%. Granted the home prices were significantly less, but the monthly payments were high, considering the lower prices of the times.
Fast forward to 2010, with interest rates the lowest in 30 years and prices at 2005 levels.
What’s the difference in monthly payments with the more recent interest rates we’ve seen?
If you decide to purchase a $400,000 home, this is the difference in principle and interest payments over the last couple of years.
July 2008 – 5.75% – $2,334
July 2009 – 5.25% – $2,209
Jan 2010 – 5.125%- $2,178
May 2010 – 5.0% – $2,147
July 2010 – 4.50% – $2,027
Seattle-eastside home values have dropped significantly since the peak in the real estate market in the summer of 2007 and rates have also dropped as well. If you were to purchase a $400,000 home now, the payment would be approximately $300 less than two years ago, plus the home prices are also lower. In King County, WA, the choices are terrific because the number of homes for sale is just below the high so far for the year. Right now, in King County, there are 13,921 homes for sale.
So is it the right time to buy a home? You decide.