Interest rates fell to a historical 40-year low in February 2012 to 3.87% interest rate for a fixed, 30 year loan, after seven weeks of continuous declines. A year ago, the 30 year interest rate was 4.74%. What a luxury!!! Can you imagine how attractive it would be for future home buyers to assume your home loan years from now? This will be a great selling point for your home when home loans return to their normal levels.

If you are wondering how this affects your pocket, let us take a look at the chart below:



To make the comparison simple, let us assume that based on your present debts and your current income, you can qualify to purchase a $100,000 home with a 30-year loan, with a 3.5% interest rate. This would make your mortgage payments equal to $449.04 per month.

Now, if the interest rates go up just 1 percent to 4.5%, you will now qualify to buy only a $90,000 home as this new price will now keep your payments below $456.30. Basically, you lost 10% purchasing power just because the interest rate changed 1 percent.

In the same way, you can also imagine that if you can afford a $200,000 loan at 3.5%, you can only qualify for a $180,000 loan at 4.5% (approx).

Please keep in mind that in 2002, the 30-year interest rate was 7.0%. This would mean that, at this rate, you would only qualify for a $65,000 loan. You lost 35% of purchasing power!!!

Don't seat on the side too long, this is still a good time to buy a home.

If you have more questions, please do not hesitate to Email me or contact me at 713-589-3234 for more information.

As a By Referral Only®, and Certified Negotiator Expert (C.N.E.), Certified Distressed Property Expert (C.D.P.E.), REALTOR® , I am committed to providing such extraordinary service and expertise that you will gladly refer your friends, family and acquaintances. With your help I am able to build strong business relationships one person at a time.