Buyers need to update their relationships with their local loan officer so they know when to climb through the window of opportunity that keeps sliding wider these days. Have you been looking at the interest rates lately?

Favorable economic conditions have allowed the rates to slip below 6 percent in some markets. Bankrate.com has them listed at 5.68 percent for a 30-year, fixed rate mortgage; the Mortgage Bankers Association of America has it at 6.06 percent. (Keep in mind, these rates would be for a borrower with premiere credit and low debt.)

Nevertheless, if you've been looking to buy, a buyers market is where you need to be buying -- and that would be now. Plenty of inventory, stabilized prices, and cheap money.

As you're seeking mortgage rates, you obviously want to be looking at the cost of the mortgage as well. You want to know how much you're going to pay for points (equaling 1 percentage point of the loan amount); origination fee; document fees; appraisal, courier, etc. All of these fees will give you the real cost of the loan besides just the interest rate.

Nevertheless, the interest rate is one of the most important parts of the mortgage. If you can determine your interest rate, you'll know how much a house payment will be (within a few dollars) as you start shopping. Your interest rate will give you a different cost for every $10,000 borrowed. For instance, if you're in the $300,000 range and you're going to put down $30,000, and the interest rate is 6 percent, then every $10,000 borrowed will cost about $60 per month.

If you're rate is at 7 percent, it's $66.50 per $10,000 and so on. Thus, if you look at a house for $320,000 at 6 percent, you know the monthly payment would be $120 more than the house for $300,000.

This of course doesn't include the taxes and insurance which will differ quite a bit from area to area. To determine the total monthly cost per $10,000, you'll also need this information. For most jurisdictions, the tax bill is collected by the mortgage company, held in escrow, then paid out to the tax revenue department. So if your taxes are $3,600 per year, the lender adds $300 per month to your mortgage payment and holds it in escrow till the due date.

As you can see, this little bit of information can assist you in determining what the monthly expense would be for each home you see in a different price range without having to run a whole new mortgage calculation. Thus you would know that a mortgage of $270,000 at 6 percent would cost you $1,620 per month. Then, as you move up and down the scale, you can calculate what that's going to mean to your personal finances. A $280,000 mortgage would be $1,680 ($60 more) and a $260,000 mortgage would be $1,560 ($60 less).

Keep in mind, the above number ($60 per $10,000) is only principal and interest. If the taxes for that house were at a .89 rate per $100 in value, then you could calculate the taxes per $10,000 as well -- in this case, it would be $89 per $10,000. So we add that to the amount -- so the total cost per $10,000 for principal, interest (at 6 percent) and taxes (at the .89 per $100 in value) would be $149 per month.

This way, if you see the house up the street with the garage is only $10,000 more -- you know it would run you an additional $149 per month. Understanding these simple financial principals can help take the mystery out of the home-buying process and keep you in control of your personal finances.

Published: March 23, 2007

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Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple. Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.