The current 30 year fixed mortgage rate is about 4.5%. That's a note of $1266 per month, and a final interest payment - if paid over the complete 30 years - of $206,000. That's a tremendous sum, and at current home values, that's not a huge price to pay for a home.
How this works out is to be seen, but with mortgage interest rates rising, and the mumbling of the Fed rates will rise to slow inflation, home buyers might find the market is too expensive to participate. I have a feeling the bubble is bursting, real estate agents will find far less revenue, those wanting to sell will have to sit on their real estate, and the crunch of inflation will lead to too many defaults. I hope I'm wrong, but from my perspective, it's unavoidable.
$1266 per month for 30 years is $455760.00
ReplyDeleteInitial loan $250,000. The unrounded payment is $1266.71. Interest is $206,016.78. The total unrounded money spent to purchase the home is $456,016.78.
DeleteThat's cutting it to the gnats ass, which really doesn't make a difference. In the big picture, that's a tremendous amount to spend for an overvalued piece of real estate.
Time for realtors to find another line of work.
ReplyDeleteMy mother had a close friend that was hit with a double whammy after a real estate bust. Her income almost completely disappeared, and she lost her home in a hurricane. She was good at selling real estate, but little was found to sell.
DeleteMy son is going back into construction and renovation.
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