With talk of another possible rise in interest rates in the air, should the Fed decide to move forward on this action, it can have a long-term effect on investors. It can also have an impact – in some cases, a significant one – on the amount that you’ll ultimately pay for a new home. That’s because an increase in interest rates can also increase the amount of your monthly mortgage payment.
Although just a quarter- or a half-point increase in mortgage rates may not seem to be a big deal, the reality is that if you are in the process of obtaining a mortgage, over a 30-year period of time, it could make for a tremendous difference in the total amount that you pay for your home.
For example, if you are borrowing $150,000 for 30 years, with an interest rate of 4 percent, your monthly payment (for principal and interest) would come to $716 – which would equate to total payments of $257,804, with $107,804 of that being interest. But, if the interest rate that you secure on your mortgage was instead 4.5 percent, your total interest amount would jump to more than $123,600 – a difference of nearly $16,000.
So, what can you do in order to help yourself with keeping your monthly mortgage payment on the lower end?
If you’re currently looking for a home, one solution would be to work with a lender in getting pre-approved for a mortgage, and then locking in a rate as soon as possible before any increase has taken effect.
We can help you to quickly narrow down your home search, based on your specific parameters, such as location, size, and features, as well as an asking price range. If you’re ready to move forward, you could end up saving yourself thousands on your next home. So, Contact Us to get the process started.