Mortgage Rates and What They Mean to You
The last couple of months have seen a slow rise, in still historically low, interest rates. Experts are predicting the rates will continue to make a slow ascent into next year. What does that mean to your buying power in the short term? And what does it cost you in the long term?
Here is an example of how interest rates variations affect your purchase:
A $500,000 purchase price with 30 year conventional loan requires 20% ($100,000) with a $400,000 loan.
- Using today’s average rate 4.2%, the monthly principal & interest payment would be about $1956.00/month. Over the 30 years, assuming no prepayment, the borrower would pay $304,184.00 in interest.
- The same purchase price and loan amount with a quarter point raise in rates to 4.45% would mean about $2015.00/month (principal & interest). Over the 30 years, assuming no prepayment, the borrower would pay $325,355.00 in interest.
It’s never too early to begin planning your next or first home purchase. Call us today to get started!