Long-term mortgage rates have dropped to new record lows several times this year, most recently last week when they fell to 2.80%
A year ago, rates were almost 100 basis points higher, so UrbanTurf is taking its semi-regular look to see how the much lower 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:
October 2019: The average mortgage rate was 3.75 percent.
Monthly mortgage payment: $2,964
Total outlay on mortgage (monthly payment x 360 months): $1,067,018
October 2020: The average mortgage rate is 2.80 percent.
Monthly mortgage payment: $2,629
Total outlay on mortgage (monthly payment x 360 months): $946,702
So, the difference between a rate of 3.75 percent and 2.80 percent is about $330 a month or $120,316 over the life of the loan.
This article originally published at https://dc.urbanturf.com/articles/blog/330-a-month-the-difference-a-year-makes-in-interest-rates/17455.
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