$300 a Month: The Difference a Year Makes in Interest Rates

• June 1, 2020

by UrbanTurf Staff

The average on a 30-year fixed-rate mortgage dropped to 3.15% last week, the lowest level ever for these type of rates. 

A year ago, long-term rates were just under 4 percent (3.99 percent), so it feels fitting for UrbanTurf to take its semi-regular look to see how record-low rates are impacting mortgage payments.

We took a home with a $800,000 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:

May 2019: The average mortgage rate was 3.99 percent.

Monthly mortgage payment: $3,051
Total outlay on mortgage (monthly payment x 360 months): $1,098,636

May 2020: The average mortgage rate is 3.15 percent.

Monthly mortgage payment: $2,750
Total outlay on mortgage (monthly payment x 360 months): $990,112

So, the difference between a rate of 3.99 percent and 3.15 percent is $300 a month or $108,524 over the life of the loan.

This article originally published at http://dc.urbanturf.com/articles/blog/300-a-month-the-difference-a-year-makes-in-interest-rates/16901