The Actual Costs of Borrowing vs Interest Rates

Everyone who has a mortgage or who will be getting one soon is rightfully paying attention to what is happening with long term mortgage interest rates.  For years analyzing your Actual Costs of Borrowing was straightforward since there was essentially no interest being paid on liquid deposits (Money Markets, Passbook Savings or Short Term CD’s) but that calculus has changed in the last year and a half.  2 years ago you were earning zero on your deposits so if you put more money down to avoid paying interest on a higher loan balance you were looking at financing less at 3.5% to 4%.  Made some sense.  Now you are giving up 5% to avoid paying 8%.  Guess what?  That’s actually a better deal.

So Chris, what is the point of this and some of the more esoteric financial and market data points that you are always sharing with us?  It’s just this:  Until you run the numbers with people who are trained for this, taking into account the specifics of YOUR financial and life situation, you might be making some significant mis-calculations.  I have an incredible team of financial planners, tax professionals and lenders to help shepherd this analysis.  (Yep, I’m going through it now myself!).  We, and our budgets and financial profiles, have been through a lot in the last 4 years.  From COVID to devastating inflation to interest rate rises on everything (how 29% interest rates on credit cards aren’t Usury I’ll never understand).  And of course housing and real estate plays a central role in all of that.  So if you, like me, are ready for a comprehensive look at your current and prospective housing situation and its role in your total financial picture, reach out!

It’s a good life.