REAL ESTATE:

What does record-low mortgage rate mean for Las Vegas home buyers? Here’s an example

Sale winds: A Henderson home is advertised for sale on July 13, 2009.

The three-bedroom residence at 1083 Hernandez Avenue shows how much difference five years and a record-low mortgage interest rate can make for prospective homeowners.

In November 2007, when the average rate for a 30-year fixed home loan was 6.21 percent, the home sold for $348,500.

Today, with the average rate having hit 3.83 percent last week, the property is on the market for $180,000.

The bottom line: Today’s buyer would save almost half a million dollars compared to the buyer of five years ago — $168,500 less up front because of the lower sales price and $297,238 less in interest over the life of the loan.

“The interest rates certainly are an encouraging factor for people to go out and purchase or refinance,” GLVAR President Kolleen Kelley said Friday. “A quarter of a point is probably not going to make a big difference on a monthly payment, but if it’s half a point, a point, two points and you’re looking to refinance or buy, now is really the time to do it.”

According to the Freddie Mac Primary Mortgage Market Survey, the rate slid from 3.84 percent to 3.83 percent last week — the lowest since long-term mortgages began in the 1950s.

Over the past two decades, 30-year fixed home loans averaged 6.9 percent.

Over the past decade, they averaged 5.93 percent. Slow U.S. job growth and financial uncertainty in Europe contributed to the most recent drop.

Thirty years ago, borrowers paid upwards of 20 percent for home loans.

Things have changed drastically since then, but today's low mortgage rate and reduced prices come with a catch: Compared to the days that led to the collapse of the housing market, lending practices are far tighter.

“You have to truly qualify,” Kelley said. “So it’s not like everyone can run out and get a mortgage like they did in a boom era.”

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