Yesterday we commented that Bank Interest Rates are at record lows. Here’s a fascinating bit of information that virtually everyone overlooks:
- Bank Interest is the cost of borrowing money, it represents the bank’s costs, their profit, and what is allowed within the law.
- Bank Interest is almost always the LARGEST single expense in building a home!
- You will pay the bank more for your new home than what a Modular Home costs.
- You will pay the bank much more for your new home that it would cost to stick build.
So…….., if you biggest expense goes down that is a significant factor to consider.
When researching mortgages, you will here a lot about POINTS and of course you wonder that a Point is and how does that impact you.
- A POINT is one percent of the mortgage’s total. So, if you are applying for a $250,000 mortgage ONE POINT would be $2,500 and two points would be ….., and so on. It is simple math that you can do.
- A Point represents Bank Profit. Remember, the greater the risk a business takes the greater their profit. So, if you pay the bank upfront that lowers their risk and as a result the rate goes down. That is a huge generalization but basically the underlying truth.
- The advantage of paying a point is that usually it will lower the interest rate and therefore lower your monthly payment.
- The disadvantage of paying a point is that it is more upfront money you need to pay.
Actual numbers. If you borrow $1,000 at today’s rate of 3.625% the monthly payment is $4.56 (Remember that is $4.56 for each and every One Thousand Dollars) At the end of your mortgage you will have paid back $1,641.60
Remember we mentioned a mortgage of $250,000 To pay off that mortgage it will cost you $410,400 or $160,400 IN INTEREST.
Now do you see why interest is so very very very important! Right now interest rates are at record low rates. This is a great time to save a lot of money!
Can Vermont Modular Homes help you? Give us a call at (802) 985-5855
ALSO………….., stay tuned to our blog posts, we are going to be providing some fabulous offers so that you will save thousands.