Mortgage Interest Rates Explained by a Realtor
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Mortgage Interest Rates Explained by a Realtor

Good mornin’! Let’s just call this particular video a little bit of perspective. Now, I called it PSA, so instead of a Public Service Announcement, let’s call it a perspective adjustment because y’all, the real estate markets all over the country have been cooling off for some several weeks and when you talk to any economic guru or financial wizard, they’ll tell you, “The soft spot in the economy right now is real estate.” And they don’t really have a good reason why because we now do have some inventory cropping up all over the country, and we have houses that aren’t selling as quickly, and the first thing people usually tell y’all, is that interest rates have gone up and when they say that, y’all, people act like it is a pearl-clutching moment of.. (gasping) “Oh lord!
Jesus, please help us all!” “The interest rates are going through THE ROOF!” It’s very chicken little, which is kinda outta control. So, I wanted to provide for y’all some perspective this morning. First of all, I’m directing this a little bit at my millennial friends, primarily not because y’all are doing anything wrong but y’all have lived through an entire decade of what we have called, “historic low interest rates” and they are historically low for the past 10 years. In fact, some of y’all think that 3% is normal on a 30 year fixed. Some of y’all even thought 2.5% was normal on a 30 year fixed and it was and that was a moment in time. And frankly, a lot of y’all just got mad because you could not refinance and get those low rates because your equity was all messed up during the dark years and I get that, and you’re still kinda mad about it and I don’t blame you for that but that’s just how life goes. So, when you are a millennial and you’re, just now, fixing to buy a house and you’ve been 10 years in the making for it, let’s just say you’re 28 years old, well, you were 18 when the markets were in the toilet and stayed down there for awhile. So, you really don’t understand the historic piece. So, that’s where I wanna give y’all a little bit of perspective because I’m a nerd and I love to share my nerdiness with y’all in the world because you know, you don’t wanna do any of the research that I do. So, I pulled up historic interest rates, 30 year fixed rates. Now I looked at data going back to 1971 and made my little Excel spreadsheet. When I did that, I ran the average because one of the fun things about using things like Excel, is you don’t have to sit there and plug the numbers in anymore, now you can mash a button, and it will tell you the numbers. So what I did, it’s like I’m clickin’ and clickin’ and clickin’ here because that’s what we do. If I mash the buttons for an average on that 30 year fixed mortgage rate, y’all it is 8.16%. Now let’s think about that for a minute. Right now you’re just under 5% on a 30 year fixed rate, as opposed to historic over 30, no, since 1971, that’s 47 years where your average over that time frame is 8.16%, and those of us that have been around real estate for awhile will tell you that we remember the days when that was still lookin’ like a dream world. Y’all my first house that I bought in 2001 was at 11 and 3/4% interest. Now was I glad to get note? Yes I was glad to get a note, because that was my first house, and it was me single girl buyin’ my first house. And frankly that’s our biggest demographic of buyers, right now y’all is this demographic that is single women buying houses. So I feel like I was a ground shaker, breaker at that time. So 11 and 3/4 was my interest rate and I was glad to have it. Now, was I scared to buy a house? yes. Was I nervous about what was gonna happen in my life? yes. Because you never know, when you’re in a commission world if you’re gonna have another closing or not but it worked out okay. So what I wanna tell y’all is that when interest rates are at 5%, first of all be grateful, second of all it’s gonna be scary no matter what the rates are, whether it’s 1% or 14%. It’s going to be scary and that’s okay because it is a big decision. But what I’ll tell you is that it’s not a bad decision and here’s another data point y’all ought to know. I looked at the numbers in Charlotte, North Carolina for rents, ’cause rents are out of control here and I know in your market it may be just as bad. So our average rent in Charlotte is $1,400 a month. That’s where we have a problem with affordability, y’all. Cause our working poor don’t really have a lot of good options and they can’t buy ’cause their credit’s not ready or they don’t have a little down payment. Although there are down payment assistance programs that you should ask your realtor about, but if they want to rent y’all they’re in a hurt world of hurt, because a one bedroom apartment is still $1,235 a month. When I was rentin’ it was not that high. So you gonna need about four roommates I reckon to make it through, so that’s where men do have an advantage ’cause y’all are much better in roommate situations than women are ’cause we need more bathroom time. So, if $1,400 a month is your rent, let’s talk about if you can buy a house. So I ran some numbers and I used a 5% interest rate, ’cause again we’re hovering just under 5%. In Concord, where my office is located here. So hey! from Cabarrus County, our average house price is $234,000. So if you plug in your interest and your property taxes and your insurance in, it looks like your house payment’s gonna be right at $1,450. So that’s right there at the average rent for an apartment. That’s the same thing, y’all and you own it and you’re paying it down. So yeah, it’s scary but it seems kinda crazy to me, that you would rent if you haven’t checked out your options. And in Charlotte, which is of course the big city, their average price there is $303,000 and we love selling houses in Charlotte where taxes are a little bit higher. But say you bought the average house there of $300,000, that’s a $1,900 a month payment. Still not that much more than rent for an apartment and there’s lots of houses below that price point, if you want to watch your budget. So, what I want y’all to understand is that first of all, 5% is not high on Interest Rates and if you are somebody who bought your house at a higher rate than we’re at today, I’m gonna ask you to tell the world what your rate was so that you can provide some perspective and if you are a young person or a first time buyer of any age, I want you to call your realtor and let us talk to you about a little bit of perspective. Because it’s kind of making my stomach hurt that y’all are paying this much in rent and you don’t really have to. So, think about it, give us a shout ’cause we will help you make it over the finish line. And by the way y’all, it’s alright to be scared. But the advantages long term are huge because by the way, I still own my first house and now it’s an investment property.

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