The Costly Difference 1% Can Make
A mortgage interest rate is the amount of interest the amount of interest you’ll pay whomever you took the loan out with. You may not give much thought towards what mortgage interest rates go for, but we’re here to tell you, there can be huge savings with as little as a 1% lower rate. Let’s take a look at how it all breaks down.
Take this scenario as an example:
You purchase a $200,000 home.
You put 20% or $40,000 towards your down payment.
This makes your loan amount $160,000.
If you choose a 30-year mortgage and the interest rate on your $160,000 loan is 3.5% your total monthly mortgage payment would be: $718.47 per month.
Now, let’s compare that with an interest rate of 4.5%.
Using the same price of $200,000 with 20% down making your total loan amount $160,000, your monthly mortgage would now be: $810.70.
$100 per month may not seem like a lot. However, over a 30-year period, or 360 months, it adds up to $36,000!
We can think of a lot of other ways to spend $36,000! If your situation allows, being strategic with the timing of your home purchase can really pay off. The good news is currently, mortgage rates are down almost a full percent from what they’ve previously been.
For more information, or to discuss the right time for you to buy or sell your home, please contact us.
Do the math. Use a mortgage rate calculator to explore various costs, down payment amounts and interest rates and to help determine your monthly budget.
Lastly, one of the first steps for purchasing a home is to contact a residential lender, view our list here.