Mortgage rates continue to hover around historic lows, despite predictions to the contrary. One year ago, the average interest rate on a 30-year fixed-rate mortgage was 4.37 percent. On Thursday morning, Freddie Mac reported 4.13 percent as the average on the same type of loan. That .24 difference in rates impacts your mortgage payments more than you might think.
Using the example of a home buyer with excellent credit purchasing a $500,000 home, UrbanTurf examined how monthly mortgage payments changed between this year and last. In each case, we assumed the buyer put down a 20 percent down payment. These figures refer just to the principal and interest on a loan, and don’t take into account taxes or insurance.
Here are the two scenarios:
July 2013: The average mortgage rate was 4.37 percent.
Monthly mortgage payment: $1,995.96
Total outlay on mortgage (monthly payment x 360 months): $718,545.60
July 2014: The average mortgage rate is 4.13 percent.
Monthly mortgage payment: $1,939.76
Total outlay on mortgage (monthly payment x 360 months): $698,313.60
So, the difference between a rate of 4.37 percent and 4.13 percent is about $56 a month, or $20,232 over the life of the loan.
The UrbanTurf Mortgage Rate Disclaimer: The rates reported by Freddie Mac for 30-year mortgages are usually the best rates that the most qualified borrowers can get, so borrowers or those considering refinancing should not necessarily read this news and think that they can go out and get a loan with the quoted interest rate.
This article originally published at http://dc.urbanturf.com/articles/blog/56_a_month_the_difference_a_year_makes_in_interest_rates/8749
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