The new 5% rates

Any real estate professional worth her salt will tell you that you should get specific financial information from a mortgage industry professional, rather than from a real estate agent. Unless an agent has also worked in the mortgage industry, the agent can only give you secondhand advice that he has received from a lender, or from his/her own personal experience & observations as a consumer. That being said, I spoke with an Atlantic Bay Mortgage loan officer to get a new estimate of the cost of monthly mortgate payments (PI & TI) since rates have been dropping. A lot of people are getting 5% and even 4 & 7/8 with points.

The old estimate I had been working with is $750 to $800 per $100,000. That means that a $200,000 house would run you roughly $1,500-$1,600 per month. At 5% the estimated monthly payment drops to $650 per month for a $100,000 house or $1,300-$1,400 per month for a $200,000 house.

So basically, even though houses in Hampton Roads cost significantly more than they did when I first moved back in 2002, as rates drop, we move closer back to the middle as far as what you're paying per month, b/c the house may cost more, but the lower rate drops the payment. My broker says the prices with these rates bring the monthly expenditure closer to what it was in 1998. My broker also told us that his parents in 1955 bought a home @ 5% rate, and he thought it was something he'd never see in his lifetime, especially with the 18% rates of the late '70's/early 80's. But now we are at 5% again. The potential savings are significant.