Mortgage Rates are inching up in Las Cruces

So the mortgage interest rates are inching up. What does that really mean for an average buyer? Not much if the rates move a tenth of a percent over several months, however....

Let’s say we are getting ready to buy a $150,000 in Las Cruces.  Last month we could have picked up a mortgage for 3.8% from a variety of local and national banks – assuming of course, that our credit is in decent shape. Our payments would have looked something like this: No PMI* because we are putting 20% down --- or $30,000

OK so our basic payment which includes property tax, no PMI *, 20% down, would be around $634.15 per month.  Also note that over the lifetime of the loan our total payments sums to a whopping $228,293 - imagine what that number would be if the interest was 8% ! Also in the state of New Mexico our property taxes are somewhat lower than other states. This is how I came up with the property tax percentage of .6%... Property tax is now based on the market value of your home divided by one third to get to the assessed value, then approximately 2% of the accessed value.  Therefore $150,000/3.333 = $45,000X.02= $900 tax which is .6 of 1%.

Now lets see what the numbers look like if the mortgage interest rate pops up to 4% which it just did. Everything else remaining the same.

The monthly increase is $13.75 - for the difference of two tenths of one percent (.2) interest rate. OK - that's not earth shattering, but over time it can mount up and make a difference. The difference in the total amount of payout is about $5,000 over the life of the loan. If we were talking about a 1% rate hike (not inconceivable) the difference would be 5 times or about $70.00 per month.

PMI stands for Private Mortgage Insurance that the bank or lender wants you to pay for if you do not have a large enough "vested" interest in the home that you are buying. In today's market it usually means that you have to purchase (monthly add-on) PMI insurance for the lender if your down payment is less than 20% of the sale or appraised value of the home. There are exceptions, such as when the government backs the loan, etc.  In the above calculations we assumed no PMI insurance because we illustrated a 20% down payment.

When looking to purchase homes, watch the mortgage interest rates, they can move quickly. Also waiting to purchase a home can mean hundreds of dollars in the mortgage payment especially when it comes to the value of the loan.

Soon I want to interview a couple of local bankers and let them tell us about developing trends that are emerging in the mortgage industry. 

Need help getting mortgage approval? Give me a call, chances are I can put you into contact with the right banker to help you get the home you want.

Gary Beeson

Las Cruces Real Estate

575 520-5515

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