One year ago, the average on a 30-year fixed-rate mortgage was 4.29 percent. Late last week, Freddie Mac reported 3.68 percent as the average on this type of loan. So, how does that change in rates impact your mortgage payments?
To get a sense, UrbanTurf took a home with a $600,000 purchase price and assumed our buyer has excellent credit. Using the current rates and rates from last year, we examined how monthly mortgage payments changed. In each case, we assumed the buyer put down a 20 percent down payment. Note that these include principal and interest, but not the cost of insurance or taxes.
Here are the two scenarios:
April 2014: The average mortgage rate was 4.29 percent.
Monthly mortgage payment: $2,373
Total outlay on mortgage (monthly payment x 360 months): $854,123
April 2015: The average mortgage rate was 3.68 percent.
Monthly mortgage payment: $2,204
Total outlay on mortgage (monthly payment x 360 months): $793,416
So, the difference between a rate of 4.29 percent and 3.68 percent is about $169 a month or $60,707 over the life of the loan.
This article originally published at http://dc.urbanturf.com/articles/blog/169_a_month_the_difference_a_year_makes_in_interest_rates/9848
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