How Do Mortgage Rates
Affect Your Monthly Payments?
Everyone understands that higher interest rates mean higher mortgage payments. Most people are less clear on how to determine exactly what a quarter or half a point means to their hope of buying a home. Interest rates are slowly coming down, and currently run between 6.5% and 6.75% on a 30-year fixed mortgage. This is good news, of course, but what does it really mean to you?
One of the easiest ways to understand how interest rates impact your mortgage is to look at Cost-Per-Thousand. The chart below shows how each 1/8th of a percentage point alters both your monthly payment and the total amount you will pay over the course of the loan. To use this chart, simply multiply the monthly cost by how much (how many thousands) you are borrowing.
Yo
|
Monthly Cost Per Thousand 30-Year Mortgage | |
| Interest Rate | Cost Per Thousand (Per Month) |
| 6.00 % | $6.00 |
| 6.125 % | $6.08 |
| 6.25 % | $6.16 |
| 6.375 % | $6.24 |
| 6.5 % | $6.32 |
| 6.625 % | $6.40 |
| 6.75 % | $6.48 |
| 6.875 % | $6.52 |
| 7.00 % | $6.60 |
For example, if you borrowed 200,000 and your rate is 6.5%: Your monthly principal and interest payment on a 30-year mortgage at this rate is calculated as:
200 X 6.32, or $1264 per month.
This chart can give you a clear idea of what your principal and interest would cost every month at the current 30-year mortgage rates. There are other expenses, such as insurance and taxes. If you are a first time buyer or a veteran, you may qualify for a non-conventional loan at a reduced rate. There is a lot to consider, but there is help!
If you’re interested in buying a home of your own, get in touch with Joe Salty! Joe and his team can demystify the process and help you realize your dream.
If you’re considering selling, dropping interest rates are good for you, too! When the rates go down, demand goes up! Joe would love to help you find just the right buyers for your home!
Joe would love to be your Realtor!
