I don’t think many people actually understand how low the mortgage rates really are today and how those low rates work with an amortization payment schedule to make real property purchases an amazing opportunity.  I recently had a conversation that reminded me that we are in uncharted territory historically speaking.

historical 30 year mortgage fixed rates

At every twist and turn in the house selling and purchasing process I have looked forward to getting my boss in his office to talk it out with him as I respect his opinion and at almost every opportunity he has provided insight that The Wife and I just didn’t think about.  I don’t think he really understand how much I appreciate the advice he gives and one day I will let him know.  It is almost to the point that if anything, at all occurs, The Wife and I will start to ask ourselves what would “Boss-man” think.  It was during one of these conversations where we started crunching some numbers and were shocked on the outcome.

One day, Boss Man was telling me about buying his first home.  It was in the late 80’s and he was purchasing a home with a $250,000 mortgage and he mentioned that his interest rate was around 10%.  Side note:  that same home on the same block is in the $600,000 range today, even after the correction, but he sold that home for $800,000+ a year before the correction.  I had heard stories from Grandparents, my parents and my in laws about their first home purchase in the early 80s where mortgage rates were hovering near 20%! But since were on the topic I immediately fired up my mortgage calculator:

$250,000 Mortgage at 10% Interest:

250K 10Percent Mortgage

 $400,000 Mortgage at 3.75%:

400k Mortgage

His monthly payment was more than what mine is going to be and it was in 1990 dollars! Wow.