Residential home and condo interest rates now at their lowest point in over a year!

Uncertain economic data, Ebola or whatever the case, interest rates are dropping.   Not since May 2013 have we seen rates that are as of today hitting as low as 3.75% on a 30 year mortgage and 2.875% on a 15 year loan.      To put that in perspective lets talk a $150k loan, with say 20% down on a $180k midrise or highrise condo.   The comparable condominium will no doubt cost around $1400-1600 a month to rent, and rents will continue to rise.    Newsflash; more and more people are moving to Atlanta.
So the monthly carrying costs are as follows:

$150k loan is $463 per per $100k, so:
$695 for the loan (principle plus interest), $250 a month for HOA (estimate, think $220-280 and most come with either water or internet/cable), and annual taxes of ($180k purchase price x 1.7%)-$1150 Fulton County Homestead exemption (if it is your primary residence you will apply and get this), thus $1910 for annual taxes, divided by 12 is $160 a month escrowed into your mortgage payment.     The annual insurance for the condo is likely around $300, so $25 a month escrowed into your mortgage payment.  Thus, $695+$250+$160+$25=$1130 a month.   Yes, $1130 a month, or nearly 25% less then the $1400-1600 rate for a similar priced condo to lease.

Now, this example is with 20% down or $36k.  Some may not have $36k to throw down.   Thus with say 10% down, or $18k, the monthly loan payment will likely come up around $100k for the additional principle, and then another $100 for the PMI since the loan is over 80% of the value.  Thus the monthly payment with 10% down would likely be just under $1350 a month.  Still less then renting.

As I progress to breakdown the advantages, The yearly interest of around $3600-3800 the first few years along with the $1910 of annual real estate taxes would be about $5500 in deductions.    So lets take someone with an annual salary of $80,000.   Even if they max out their 401k, their marginal tax brackets are still around 30% for federal, and 6% at the state level (we really need to drop the GA State income tax rate, 6% in GA is simply too high), thus 36%.   So, 36% of $5500 is $1980, s0 nearly $2000.


Thus with 20% down at $1130 a month, vs renting at $1400 a month that is a savings of $270 a month, or $3240 a year, plus the $1980 in tax dollar for dollar savings.  So a total savings of $5220 a year, and that is before potential appreciation returns.   Now it gets even better since the $150 a month of principle is paying down your loan.  So that is $3600 a year (more and more each year as loan is paid down) that is also returning back to you in the form of paying off the loan.   Thus the $5220 in savings a year plus $3600 is $8820 a year.    $8820 on one’s $36,000 investment is a return of 24.5% before an appreciation is even considered!


Al Alford of Midtown Bank is who I use for all of my loans.  ATL Condo Deals clients always check around with a number of clients for the best rates, but the truth is, with no points, and very competitive rates (3.75% for 30, 2.875 for 15 as of an hour ago), Midtown Bank always gets the business.  Al Alford can be reached at (678) 427-0120 or

As always feel free to contact me or a member of my team for further detail on the advantages of 1st and 2nd home Real Estate.     Componding gains on both a 1st and 2nd home/condo through the use of cheap leverage (that is what you call loans of below 3-4% that are tax deductible) is essential to anyone’s wealth building strategy.






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