interest rate is most dramatically illustrated by comparing the costs of the two homes if held for the full term of the mortgage. Believe it or not, the two homes would ultimately cost nearly the same amount after thirty years of financing!

1993 $372,250 home   -37,225 down payment $335,025 financed at 10% interest rate Monthly = $2,940 Principal & Interest Total home cost after 30 years: $1,095,663 P&I 2003 $611,150 home   -61,115 down payment $550,035 financed at 5% interest rate Monthly = $2,952 Principal & Interest Total home cost after 30 years: $1,124,087 P&I

Certainly everyone sees the advantage of purchasing a home with these record low interest rates. Very few, however, view the interest rate as a product in and of itself. Nor do they realize that the price of this borrowed money is ultimately more important than the cost of the home itself. It is exactly the savings on this borrowed money that allows today’s homebuyers to purchase homes at these unprecedented savings. Finally, realize that interest rates are surely going to rise. Many experts predict that we’ve seen the bottom and that rates now will go nowhere but up. Without a doubt, locking in a mortgage at today’s favorable rates is one of the best financial decisions that anyone can make today.

Look for Nicholas S. Gouletas’ column every two weeks. Nick welcomes your questions and suggestions. Please forward any feedback to Nick at: REquestions@americaninvsco.net

Reprinted from Chicago Tribune July 13, 2003

The secret of buying real estate at half price

While I’ve made many bold statements during my 30-plus years in the real estate industry, the notion of buying real estate at half price is actually quite logical and certainly no secret. The fact of the matter is that anyone who buys real estate today is literally purchasing real estate at half price. It’s a secret only to those who haven’t realized the huge boost that today’s low interest rates can give to their personal estates. It is my intention to share with you in this column some of the insights that I’ve gleaned from my extensive real estate career. I hope to answer some questions you may have, and perhaps set you on the path to generate a few more.

Recently, the Feds cut interest rates to an incredible 45 year low. 30-year mortgages can now be obtained for 5.1%, and 3-year adjustable rate mortgages can be had for under 3.5%. To realize the dramatic implications of this development, you have to remember that up until a couple of years ago, the conventional 30-year fixed rate mortgage has varied anywhere from 7% to a high of 18% over the last three decades. With interest rates averaging over 10% during this period, today’s low interest rates virtually give everyone the freedom to buy real estate at half price.

Consider this true story. A friend of mine owned a $372,000 home ten years ago. His mortgage rate then was 10%. Today this same man lives in a $610,000 home with a mortgage rate of 5%. Both times he made a down payment of 10%. His current monthly payments are now practically identical to what he paid in 1993, and he lives in a home worth nearly twice as much—with twice as much living space. But perhaps the advantage of the lower