Long Term Mortgage Thinking

I do know that there is a tendency to think of a house simply as shelter. Given our annual temperature fluctuations, that is a fair comment. Problem is a house is more than shelter. It is an investment that one can add to the enjoyment of our retirement. So when you buy, I want you to think about the next five (5) years or even up to twenty-five (25) years.

When you buy, your income and today’s rate determines what you can afford. Based on these facts, let’s say you can afford to purchase a house for $180,000.00. You put five 5% down. Based on a rate of 3.89%, today your payment would be $875.71 (principle and interest). After five (5) years you could owe $168,397.27.

What happens if rates return to a number closer (to what I would call normal) 5.8%? If rates did rise to this level, your payment would be $1099.41. This is an increase of $223.62 per month. Remember property taxes also tend to rise each year. Do you think your income will support this increase? If not, then plan today to deal with this possibility. Planning for tomorrow is good. Call if you have questions.