Interest Rates Are Reshaping The American Dream

[Joshua Michael Hauman]

Let's compare a $250,000,0 loan today versus two years ago.

In America, the average person has a credit score of around 715 you’re looking at around 6.6% on a conventional 30 year loan.

Excluding taxes and insurance, your monthly payment is roughly $1,700 dollars a month. 24 months ago that same loan of 250k, with a 715 credit score on a 30-year fixed was hovering around 4% meaning you’d pay just under $1300 per month. Thats 400 more, per month, every month, for 30 years… an additional 144,000 in just interest payments alone.

But check this out, not only have rates shot up over 250 basis points, 2.5%, from 4% to 6.6% but what else has gone up?

Home prices increased in the same period nationwide by over 13%.

Taxes are based on the state, county and property value so what do you think happens to taxes when property values go up? So do your taxes.

Insurance costs as well have risen on a nationwide basis by over 25 percent and if you’re in states like Louisiana, Nebraska, Colorado or Arizona it's over a 50% increase.

So the average person sitting there saying how am I supposed to afford to buy a house today? My incomes not going up? Enter the funeral of the American dream.