Keeping Interest Rates in Mind

Interest rates are an important factor to take into consideration when deciding when to purchase real estate in South Lake Tahoe. An increase in mortgage interest rates means that your payments will increase, or that you may need to lower your price range. Currently 30 year fixed interest rates are very low, and have dropped to 5.43%, and 15 year fixed rates are now at 4.91%

Lets say that you are considering purchasing a $300,000 home with 20% down ($60,000), lets look at what the payments would be at various 30 year fixed interest rates.

At today’s current interest rate of 5.43 %, a $300,000 home with 20% down would cost $1,352 per month for principle and interest. The total monthly payment for principle, interest, taxes, and insurance would be $1664.

If interest rates increase to 6%, the principle and interest monthly payment would go up to $1439, and P.I.T.I. would now be $1751.

At 6.5%, the principle and interest monthly payment would be $1517, and the P.I.T.I would be $1829.

For buyers looking to purchase a primary residence using an FHA loan, interest rates are currently 5.375% with one point. A $300,000 house with 5% down ($15,000) using an FHA loan would cost $1620 per month for P.I., and $2063 per month for P.I.T.I.

If interest rates were to go up to 6%, the P.I. monthly payment would be $1734, and P.I.T.I. would be $2177.

At 6.5%, the P.I. monthly payment would go up to $1828, and P.I.T.I. would now be $2271.

South Lake Tahoe real estate buyers should keep interest rates in mind when deciding when the right time to buy. With 93 single family houses now in escrow on the South Lake Tahoe mls, many home buyers are thinking that now is the time to buy!