If The Market Doesn’t Interest You To Buy, Maybe The Rates Will…

Jan. 31, 2009 - PRLog -- VANCOUVER - Some homes have dropped over 10% since last year (this is a conservative estimate).  If this doesn’t interest you, rate drops may.

The best 5 year fixed rate on February 8, 2008 was 5.74% and per every $1000 monthly payment it would qualify you for $182,358.31 of mortgage financing.

Today’s 5 year fixed rate is at 4.39% and now with the same $1,000 payment the qualified mortgage amount increases to $215,501.56.

As you can see, because of the interest rate change, you qualify for over $33,000 more per $1000 of a qualified mortgage payment.

If this doesn’t interest you, maybe the combination of the market drop and rates may.  Let’s take the below scenarios:

1-Last year, a home is listed at $500,000 and you are able to afford a $100,000 down-payment.  Your mortgage amount would be $400,000 with a $2193.48 a month based on a 35 year amortization at 5.74%.  After the 5 year term you will have paid $20,948.04 in principal, $110,670.76 in interest and your balance would be $379,061.96.

2-Now let’s take the same scenario, one year later and presume a 10% drop (though some areas have dropped in excess of 15%) in the house price so now the price of the home is $450,000.  You are still able to afford the $100,000 down-payment and your mortgage amount will now be $350,000.  Your minimum monthly payment is now $1,624.12 based on a 35 year amortization at 4.39%.  After the 5 year term you will pay $23763.54 in principal, $73,683.66 in interest and your balance will be $326,236.46.

3-There will be an even further reduction in principal, if you are able to afford the first payment of $2193.48 a month, and take the new interest rate (4.39%) and mortgage amount ($350,000).  With this scenario after 5 years, you will have paid $61,848.51 in principal, $69,760.29 in interest and your balance will be $288,151.49.  This balance compared to the original scenario has a difference of over $90,000 in mortgage balances in just 5 years.

If you are thinking of buying, timing can be to your advantage.  Just don’t wait for the market to turn and for the interest rates to rise
Article written and provided by Felicity Ribalkin of Verico Nova Financial Services Inc.

For further financing and mortgage inquiries, please contact the Ribalkin Viau Team at Verico Nova Financial Services Inc.

Website: www.wemortgagecanada.ca Office: 604-985-9511
Toll Free: 1-888-988-6682

Felicity Ribalkin: Felicity@wemortgagecanada.ca Office Local: 225
Ethan Ribalkin: Ethan@wemortgagecanada.ca Office Local: 226
Aurore Viau: Aurore@wemortgagecanada.ca Office Local: 222
John Ribalkin: John@wemortgagecanada.ca Office Local: 224

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About Real Estate News Vault.

Founder of Real Estate News Vault, Kevin Lynch is a local real estate expert with nearly 20 years of sales and marketing it the local real estate industry. He has sold hundreds of homes over the years, has received many industry awards for his sales achievements and lives to serve and help others.

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