Understanding the impact of interest rates on the cost of the home is important. Did you know that a $200,000 home at 5% interest is cheaper than a $150,000 home at 7%? The interest rate can make a difference in the price of the homes you can consider purchasing. Today you can get a loan at historic lows. It’s a great time to buy!
Rates are AWESOME, as you may have noticed. So if you or your buyers have not gotten back on the fence to purchase a new home, you and they need to.  Who knows when the rates will rise? They surely will, as sure as our taxes will rise.  I just read an article that as of Jan 1, 20111, the capital gains tax, personal income tax, amongst other things, will be rising. And deductions decreasing.  So don’t be fooled into thinking this low rate environment will last forever.
Home owners get one of the biggest deductions of all tax payers. The interest you pay towards your mortgage is a tax write-off!  If you are renting, you are not getting as big of a deduction as you could be.  The first 5 years of of your mortgage is mostly interest payments, very little goes toward the principle.  That means most of what you pay for your mortgage is a write-off!
Why are rates so low? The BP Gulf disaster, the souring economy , high unemployment, and continued instability in Europe. All these things make investors cautious, so they invest in bonds, keeping the yields (rates) low. Â Bonds are a less risky investment, and also get a lower return.
Parts Re-Printed with permission. Â Author: Jennifer Hernandez, Patriot Bank Mortgage
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