17 Feb How interest rates affect your mortgage payment
How interest rates affect your mortgage payment
It was just a couple of years ago you could get a mortgage for 1.99 percent. That has certainly changed now with inflation on the rise and the Federal Reserve no longer trying to stimulate the economy but actually trying to slow it down. They have begun to raise interest rates and stopped buying mortgages. This has had a dramatic effect on interest rates and how much buying power a buyer has when purchasing a home. How does the rate affect your payment?
To make this easy we will use a $500,000 mortgage and compare the principal and interest portion of the mortgage payment as rates increase. We will not add in the taxes and homeowners’ insurance since they are a constant.
· The payment for $500,000 mortgage at 1.99 percent is $1,845.
· The payment for $500,000 mortgage at 2.99 percent is $2,105
· The payment for $500,000 mortgage at 3.99 percent is $2,384
· The payment for $500,000 mortgage at 4.99 percent is $2,681
You can see for the same payment how much of a difference the interest rate is on a 30-year mortgage. In 2020 you could get 1.99 percent and now we are near 3.99 percent for a conventional mortgage and will additional interest rate increases this year by the Federal Reserve we could hit 4.99 percent by next fall.
Might be a good to move up your home buying timeline!
I hope you found my blog “how interest rates affect your mortgage payment” helpful.
Just call, text or email me with questions
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Look for more articles and videos in the future on various aspects of real estate and our state of Minnesota.
Real estate is a wonderful investment!
Jeff Anderson
The Anderson Team
www.mnrealestate.com
RE/MAX Results
612-386-8600
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