Convincing Millennials the Time to Buy is Now!
My friend, Dale Barker, and I were discussing interest rates this week. We reminisced about the “good ole days” when we got in the business and interest rates were just under 10%. Dale talked about how he explains the huge difference in buying power that someone has today versus just twenty years ago.
When talking with a Millennial about buying a house, tell them that when their parents bought a house just 25 years ago that the interest rates were around 10% and that their parents would have been excited about that rate. Today’s rates are hovering around 4.5%.
Now compare what the parents’ payments over the life of a $175,000 loan would have been versus what the child’s would be today. At 10%, the principal and interest monthly payment for the parents would be $1,536 with a total interest payment of $377,870 over a 30 year loan. The total amount of repayment on the loan would be $552,870.
Today at a 4.5% interest rate, the principal and interest payment would only be $887 per month with $144,212 in interest over the life of the loan and a total repayment of $319,212. Under today’s rates, the difference in payment compared to 25 years ago is almost $700 a month and over $180,000 over the life of the loan. Think about that. Today the same loan costs nearly half what it cost just one generation ago.
It’s simple: now is the time to buy. Waiting for interest rates to rise will only deplete the Millennial’s buying power.
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