carol elizabeth pennell asheville native real estate broker pennell@beverly-hanks.com 828.273.7770

Keep an Eye on Rates!

02/21/2011

“Have prices hit the bottom? Will prices here fall another ten percent? In fact, buying at the absolute bottom may not matter much as you may believe.

Interest rates are a powerful economic force. Because historically low rates have been commonplace for a couple of years, it is easy to accept this condition as the norm. Buyers must understand that an uptick of one percent may reduce their buying power by 10%! For example, a loan of $180,000 @4.5% equals a principle and interest payment of $1009 per month. At 5.5%, which is still an incredibly favorable rate, the same loan will run $1130, or $121 more per month, $1452 per year, totaling $43,560 over the life of the loan! Stated another way, if prices were to fall 10% and the loan amount was $180,000 and interest rates go up, the buyer has lost twice that amount in interest payments.

No question, properties must be compellingly priced to sell, but don’t forget to factor in interest rates! ”
D.Williams VP, Beverly-Hanks & Associates

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