What Lower Interest Rates Mean For You

In REAL dollars and cents

As I write this, interest rates are close to the lowest they’ve been in 3 years, making this a GREAT TIME to buy (or possibly to refinance your existing mortgage).

As an example, I created a little side-by-side comparison of a 30-year fixed conventional loan, using a $300,000 purchase price, 20% down payment, and a buyer with a 740 credit score – your interest rate could be as low as 3.625% in today’s market!

Comparing that to the exact same loan with a 4.875% interest rate (which is where rates were at 3 years ago and is still a great rate in itself, especially when you look at the big picture of mortgage interest rates over the last 30 years  ** for details on this keep scrolling down **) and notice the difference in monthly payment:

 

 

 

 

 

 

 

 

 

 

Now obviously, your individual credit score and down payment amount, as well as the loan type you’re using will impact your interest rate, but you get the picture — using the example above that’s a monthly difference in payment of $176!

Next, of course, we need to talk about how that same difference in interest rate effects the amount of money you’d be paying in interest over the life of the loan: it would cost you over $63,000 MORE with a 4.875% interest rate versus a 3.625% rate on that same $240,000 loan — and that’s not nothing!

Historical Perspective

For a quick trip down memory lane you can click on this interactive chart (provided by one of my favorite lenders, Cheryl Bullard at Premier Nationwide Lending) to see what interest rates have been doing over the last 30 years, and you’ll see what I mean when I say that that 4.875 rate is still nothing to sneeze at. (Seriously: look at where we were at in 1989!)

If you’d like more information on this topic or are ready take advantage of near historically low interest rates I’d love to chat with you about it.  You know where to find me! 😉