Regular followers of my blog will know that I’m all for presenting facts in a way that allows you to visualize them. My market reports are the best example of that. Today my goal is to show home buyers in Iowa City what effect the lower interest rate has on your mortgage payment when you buy a home in Iowa City.
To keep it simple I figured I’d stick with the very popular price of $150,000. This just happens to be the cut-off point for many of the first time home buyers I work with. The calculation in my example is for principal and interest only.
|Sales Price ||$150,000.00 |
|Downpayment – 10% ||$ 15,000.00 |
|Loan Amount ||$135,000.00 |
|Monthly Payment with Interest rate @ 4.25% ||$ 664.12 |
|Monthly Payment with Interest rate @ 5.00% ||$ 724.71 |
|Monthly Payment with Interest rate @ 6.00% ||$ 809.39 |
A 30 yr fixed rate loan in the Iowa City area today is 4.25%. A year ago it was around 5%. 2 years ago it was at 6%. At the time we all thought 6% was low.
Right now when you buy a home in Iowa City you can save a whopping $145 every month compared to 2 years ago. And that’s on a home priced at $150K. Just imagine the savings if you’re in the market for a move-up home! My example doesn’t include real estate taxes, home insurance and PMI, (private mortgage insurance). The escrow payment as it’s known would be added to the amount above to give you a final payment.
So there you have it, that’s how much of an effect a lower interest rate has on your mortgage payment when you buy a home in Iowa City. And as if that wasn’t enough of an incentive, with home prices where they’re at you’re looking at a great opportunity for getting a lot of house for a really good price!