If you're in the market for homes or considering refinancing, two things you have heard, probably over and over again are:
1. Prices for housing in most of the country
2. Mortgage rates are at historic lows
The first is obvious if you try to sell their homes or promising to buy. In some parts of the country, you will see prices down by nearly 30% of the entire year or two ago. The second is not so obvious. You can accept the claim at face value, but you really understand that historically low means? And that prices are really low, compared with the last few decades? The answer is a big "YES!"
While the cost of everything else just went sky-high recently, mortgage rates actually dropped down and left. Low rates mean less interest and reduce monthly payments. Therefore, when you can be busting its budget to pay $ 4 per gallon gas, your mortgage payments are actually much lower (on the basis of rates and prices on equal home) than they were a generation ago.
In fact, if you go back only 30 years, average mortgage rates were significantly higher than 10% over 30 years, fixed rate mortgages. Rates actually exceeded back from about 1982, when the average rate on 30 year mortgage was just above 18%! People today can not even imagine what the payment on 18% mortgage would be like. Talk about payment shock.
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