One year ago, the average on a 30-year fixed-rate mortgage was 3.88 percent. Today, Freddie Mac reported 4.85 percent as the average on this type of loan, a 97 basis point jump over 12 months. So, how does that change in rates impact your mortgage payments?
To get a sense, UrbanTurf took a home with a $700,000 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:
October 2017: The average mortgage rate was 3.88 percent.
Monthly mortgage payment: $2,635
Total outlay on mortgage (monthly payment x 360 months): $948,575
October 2018: The average mortgage rate is 4.85 percent.
Monthly mortgage payment: $2,955
Total outlay on mortgage (monthly payment x 360 months): $1,063,827
So, the difference between a rate of 3.88 percent and 4.85 percent is $320 a month or $115,252 over the life of the loan.
This article originally published at https://dc.urbanturf.com/articles/blog/320-a-month-the-difference-a-year-makes-in-interest-rates/14587.
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