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Each lender's interest rates vary. So shopping around for the best interest rate is a very wise decision. Just as thrift stores can carry the same products as the larger departments stores for less, lenders can also carry the same product at different rates. So don't cut yourself short, shop around.
Interest rates are usually expressed as an annual percentage of the amount borrowed. If you borrowed $120,000 at 10% interest, you'd owe interest of $12,000 for the first year. With most mortgage plans you'd pay it at the rate of $1,000 a month. On top of that $1,000 a month, you would also send in something each month to reduce the principal debt you owe - and the next month you'd owe a bit less interest.
Before World War ll, interest rates were around 4 or 5%. But buyers had to put down almost 50% of their purchasing price as a down payment. Interest rates stayed like that for years. But following the war, things become much more turbulent. Rates began to change several times a year. And by the 1980's, lenders were setting new interest rates as often as once a week – which still rings true today. When inflammation hit a high in the 80's, some interest rates were as high as 17%!!! And those who absolutely needed to buy, paid that much.
Luckily, rates steadily dropped through the 1990s, and had reached their lowest rates in decades in by the year 2000. Today's home buyers appear to have the most favorable interest rates since their grandparents' days – and without having to put down 50% of the purchase price either!
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