What's More Important ~ Low Rates or Tax Credit?
Although 90 percent of consumers believe that the tax credits have helped both first-time home buyers and the U.S. housing market overall, many home buyers feel that mortgage rates have a greater impact on their purchasing decisions. In a recent survey by Prudential Real Estate and Relocation Services, an overwhelming majority of those polled found that when factoring in either low interest rates or the tax credit, low rates were far more important in a decision to purchase a home now. There's a good reason for this statistic. For example, if you purchase a home for $300,000 and finance $270,000, and your interest rate for a 30-year fixed rate loan was 5.25% versus 4.75%, you would pay nearly $30,000 more over the term of the loan. This is a significant amount of money! Since the Fed's Mortgage Backed Securities purchase program ended on March 31, there has been much volatility and price swings in the markets. Rates overall are off their lows and are often quoted above 5.00% t