1975 vs 2009 Interest Rates

When I purchased my very first home in the 70’s, Adjustable Rate Mortgages (ARM’s), were becoming popular because interest rates were prohibiting many young couples, and, no doubt, not so young, from qualifying to purchase a home.  The American Dream out of reach for so many.  We were fortunate enough to finance our first home at an interest rate many coveted – 11% fixed.  Yes, I said eleven percent.  Doesn’t that sound unbelievable?  Unbelievable or not, it is quite true.  That year, my brother-in-law also purchased a house and because interest rates by then were hovering around 17%, he secured an ARM.  That was the first I had heard of ARM’s.  Now, when I hear mumbling and complaining about interest rates moving up to 6% fixed, I am compelled to get on a soap box.  I sound more like my mother every day.

Last week, interest rates were below 5%.  Yes, BELOW five percent!  Wow!  That’s almost like buying a house at 30 years-same as cash!  It is, in comparison to our interest rate in the 70’s.

Consider now, being a first time homebuyer and purchasing your very first starter home at an almost, if not completely, record setting low interest rate of approximately, let’s say……….4.675% and to top that an $8,000 tax credit.  Weigh that against renting or waiting.  Some folks will wait and regret waiting while they continue to rent.  Don’t get me wrong, I know and understand that some people can not qualify to purchase a home due to previous unfortunate events or just plain old financial irresponsibility.  But, if you’ve been in a quandary, because of the negative media regarding the economy and real estate, consider the savings of buying a larger home during these economic times.  I own rental property and the facts are, at least in the Tulsa area, house rent is higher than house payments. I almost wish I was a first time home buyer.  But then again, if I was, I wouldn’t have a soapbox now would I?

Happy House Hunting!

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