Monthly Archives: September 2010

Tax Credit Trumped by Low Interest Rates

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Buyers take notice – now is the time.  These historically low interest rates combined with adjusted property values equal a win-win for buyers today and won’t last forever.

Rates are at ridiculously low levels and buyers seem to be taking this for granted.  I find this just fascinating that vey few buyers are focusing on how rates affect their purchase power.  Check out these low rates when you take the time to actually pencil it out. 

Buying Power – Example using the 250K Median Price of a home in the Portland metro area August 2010

  •  Consider a $250,000, 30 year mortgage at 4.375%.   The monthly payment would be $1,248 per month.
  • That same monthly payment at 5.375%, where rates were a year ago, would be for a mortgage of $222,870.  This is a $27,000+ difference or 3.5 times bigger than the $8000 tax credit.  That is one way to look at the incredible savings today’s low interest rates offer buyers.

Savings over the life of the loan – HUGE!

  • Looking at the difference in payment for the same mortgage amount, the payment on a $250,000, 30 year mortgage at 5.375% is $1,399 per month, or $151 per month more compared to the 4.375% rate.
  •  In just five years, the savings would be over $9,000!!  And over the life of a 30 year loan would be more than $54,000.

These numbers are mind boggling! Yet, first time home buyers tripped over each other to get in on the tax credit before the expiration date of April 30th.

How many of you remember the late 90’s into 2000.  Rates were at 8% and that’s not that long ago!

  • For a $250,000 mortgage, the monthly payment would be $1,834, which is an additional $586 per month. 
  • In 1990, rates were at 10%, which would be $2,194, an additional $946 per month (over today’s  4.375% rate).

If you or someone you know is considering whether it is time to buy;  Don’t ignore the numbers!  Today’s rates are  only 4.375 points above ZERO.  Think Zero is coming..

Rates can and will go only one way – UP.  They go up and your buying power goes down.  As the economy improves, rates will increase and purchasing power will begin to erode.

Roberta Nopson

Lake Oswego Schools – Buses are rolling..

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Just 3 days left til the school buses start traveling through our neighborhoods fetching students with their back packs full of supplies returning to school the traditional day after Labor Day.   For many families summer is the time to move and get settled into their new neighborhood and school.  Though home sales have been soft we still sold an average of 50 homes per month selling in Lake Oswego.  That’s many new faces at the bus stop!

Remember, many schools have planned a welcome  BBQ or picnic, so be sure to check  your schools calendar.  If you are new to area, this is a wonderful way for the whole family to get to know your school, teachers, and neighbors.  Lake Oswego  and West Linn schools are excellent because of the community support received.  Come join the fun!