Mortgage rates have (thankfully!) hovered at historic lows for a couple of years, but it’s likely that we’ll see rates rise in 2016 due to speculation that the Fed will raise rates next month. How much more will you pay on a new home if the interest rate rises? It affects your monthly payment a bit more than you might think.
Let’s say, for example, you’re purchasing a home for $200,000 and plan on putting down 5% and have taxes of about $4400 per year. If you secure an interest rate of 3.9% (the current national average), your monthly payment will hover right around $1360.
With the same conditions but an interest rate of 5.0%, the monthly payment increases to $1490 — a $130 dollar difference! An interest rate of 6.0% further increases the monthly payment to $1614.
To put the current rates into perspective, consider the historical trends. Between 1980 and 1982, interest rates hovered around 20%! For an easy-to-read graph of mortgage rate trends, click here.
If you have any questions for a mortgage lender, we’d love to assist you. Just send us an email at theoffice@everyhome.com and we’ll introduce you to a friendly, local loan officer who would love to answer any questions that you may have!