Low interest rates are playing a vital role in keeping our market strong.

Mortgage rates are the biggest factor in determining how much one can afford, so when rates are as low as they are today, you and I have incredible buying power. How low are they? People who bought a home in 1963 were paying the same rate that’s available to us in 2009.

With recent dips in mortgage interest rates, housing is even more affordable. According to Freddie Mac, the average rate on 30-year fixed-rate mortgages fell below 5% to a four-month low. The 30-year, fixed-rate mortgage is averaging 4.94%, down from an average of 5.04% the previous week and 6.1% a year ago. The last time the 30-year rate was below 5% was the week ending May 28, when it averaged 4.91%. Meanwhile, the 15-year fixed-rate dropped to 4.36%, the lowest figure since Freddie Mac began tracking such mortgages in 1991. The 15-year average rate was 4.46% last week and 5.78% last year.

Lower interest rates = lower payments! The monthly payment on a $172,000 home with a 7% interest rate (a rate we saw for most of the 1990s) is $1,144. A 5.5% interest rate like we are seeing today will save you $167 a month on your mortgage! That's a savings of $2,004 a year - and almost $60,120 over the life of the loan.

A lower interest rate means you can afford more home. If you can afford a $1,144 monthly payment for a $172,000 home when the interest rate is 7%, that same $1,144 per month will allow you to afford a $201,500 home when the interest rate is 5.5%.

A lower mortgage interest rate will save you thousands of dollars over the life of the loan. The $172,000 home with a 7% interest rate means you will pay $240,000 in interest over 30 years. The same home with a 5.5% fixed rate will save you $60,400 in interest.

Financing is readily available for those with a steady job history and suitable credit rating. Your lender can easily tell you at what interest rate you qualify. 

Buyers who are pre-approved by a lender before beginning their home search will have enviable negotiating power. You may be able to convince sellers to take even more off the listing price since they already know you can afford the home and don't have to wait until your loan is approved.