Have you ever wondered how much interest rates really effect your monthly mortgage payment?
Interest rates have started rising, and will continue to rise as the economy moves on from the Great Recession and the Federal Reserve implements more normal policies.
As an example, if you were to take out a 30 year fixed mortgage on a $250,000 home (with 5% down and a credit score of 640 or above) this time last year, the interest rate would have been 3.95%. Your monthly mortgage payment would have been around $1,420/month. If you took out that same loan today, with an interest rate of 4.58%, your monthly payment would be about $1,508/month. That 0.63% difference would end up adding an extra $88/month to your payment, which adds up to $1,056/year and $31,680 over the life of the 30 year mortgage.
Another way to look at it is that if you took out a loan today with a monthly payment of $1,508/month, you could purchase a $250,000 home. Likewise, if you took out a loan with that same monthly payment this time last year, you could have purchased a $265,000 home
In summary, even the smallest percentage points will affect your bottom line. But lucky for you, rates are rising slowly, which means you still have time to find your perfect house and take out a mortgage while rates are still low.
If you have additional questions about the potential effects of interest rates on your future home purchase, please don't hesitate to give me a call at 225-229-0451. Did you know there are also special loan options available, like loans specifically for medical professionals, that offer lower interest rates?! I'd be happy to connect you with a lender who can provide detailed estimates specific to your situation.