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Interest rate roller coaster....

Interest rates…everyone talks about them so let’s do just that. They have been historically low for some time now. They went up, then they went down (to the lowest ever in recorded history) and now they are back on the rise. In fact, they have gone up about a half point in the last six weeks alone. So what does this mean to you? Well, let’s break it down.

Say you want to buy a $250,000 house, have excellent credit and plan to put down 20%. Calculating just principal and interest at a rate of 4.75%, that puts your payment at $1043. If the interest rate goes up to 5.25%, that will increase your monthly payment to $1104. So buying now instead of waiting will not only save you about $61/mth, it will also be $22,000 less in interest you will pay to the bank over the 30 year life of the loan!!!

If you really want to save even more money (who doesn't these days...) pay your mortgage every two weeks instead of once a month. That will equate to you paying one extra mortgage payment a year and save you thousands of interest as well over the life of the loan. If you get paid every two weeks (as many people do), this should be a feasible option in terms of budgeting.

 

   
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