While they are no longer at their lowest level on record, long-term mortgage rates continue to hover below 2.75%
A year ago, rates were almost 80 basis points higher, so UrbanTurf is taking its semi-regular look to see how the much lower current rates are impacting mortgage payments.
We took a home with a $800,000 purchase price and assumed the 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:
February 2020: The average mortgage rate was 3.51 percent.
Monthly mortgage payment: $2,877
Total outlay on mortgage (monthly payment x 360 months): $1,035,855
February 2021: The average mortgage rate is 2.73 percent.
Monthly mortgage payment: $2,606
Total outlay on mortgage (monthly payment x 360 months): $938,148
So, the difference between a rate of 3.51 percent and 2.73 percent is $271 a month or $97,707 over the life of the loan.
This article originally published at https://dc.urbanturf.com/articles/blog/271-a-month-the-difference-a-year-makes-in-interest-rates/17839.
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