One year ago, the average on a 30-year fixed-rate mortgage was 4.40 percent. Yesterday, Freddie Mac reported 4.08 percent as the average on this type of loan, a 32 basis point drop over 12 months. So, UrbanTurf decided to see how that change in rates impacts mortgage payments.
To get a sense, we 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:
April 2018: The average mortgage rate was 4.40 percent.
Monthly mortgage payment: $2,804
Total outlay on mortgage (monthly payment x 360 months): $1,009,534
April 2019: The average mortgage rate is 4.08 percent.
Monthly mortgage payment: $2,699
Total outlay on mortgage (monthly payment x 360 months): $971,790
So, the difference between a rate of 4.40 percent and 4.08 percent is $105 a month or $37,744 over the life of the loan.
This article originally published at https://dc.urbanturf.com/articles/blog/about-100-a-month-the-difference-a-year-makes-in-interest-rates/15226.
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