Wednesday, October 16, 2013

Shaw Homes "Sitting On the Fence Can Hurt!" - New Homes Tulsa

Sitting on the fence can hurt!

We all saw mortgage rates bottom out this summer at rates around 3.4%, some even lower.  Everyone has said it’s going to happen, including us here at Shaw Homes.  One of the rare topics that most experts have agreed on is that interest rates are going to go up.  In an interview with Tulsa’s mortgage expert Don Conwell, we asked him about the low rates:  “As much as we’ve enjoyed insanely low rates, the economic path we took to get there certainly wasn’t worth it.  Especially when you consider the collateral damage that’s still affecting the country.” 

We whined about wanting 4.0% rates again.  Don said “Nobody anticipates 30 year rates below 4% again and I don’t think we want to see the economy or global conditions that would get us there”.  Hang with us to the end of this post for the good news!

In the early 1980’s, interest rates hit insane levels of around 18 and 19%.  In the early to mid 90’s interest rates were in the 9% range.  By 2002 we were seeing rates around 6%.    

We are now seeing rates begin their inevitable climb towards normalcy.  Where “normalcy” is going to be is up to debate, however many agree it will be in the area of 6.0%-7.0%.

Since the start of this summer season, rates have increased from that low of around 3.4% to upwards of 4.875%.  This doesn’t sound like a crazy increase, but let’s look at the impact on your monthly payment. 

For this example, let’s use a purchase price of $200,000.  With 10% down, that’s a mortgage loan of $180,000.

            At a rate of 3.4% over 30 years, the payment would be $798/mon.
·         10 years of interest = $54,661
·         30 years of interest = $107,735
At a rate of 4.875% over 30 years, the payment would be $953/mon.
·         10 years of interest = $80,165
·         30 years of interest = $162,927

The numbers above illustrate that just this year, the cost of waiting to buy a home as mortgage rates rise has cost potential buyers $25,504 in interest in the first 10 years alone, and $55,192 over 30 years.

Now for the good news:  Getting a mortgage now at 4.875% versus getting one at 6.875% means a monthly payment of $953 rather than $1182.  That’s a difference of $229 a month!

If you would like to have an informative and helpful discussion about mortgages, you can reach Don Conwell at AmeriPro Funding (918)505-5920.

Shaw Homes has been building new homes in Broken Arrow since 1985.  With new home communities located in Tulsa, Broken Arrow, Bixby, Jenks, Owasso, Claremore.  We also build homes on private land. 

To view new home floorplans, communities and more, spend some time checking out our website at