Interest rates are the price tags for borrowing money. It's the extra amount you owe on top of the original loan. Dreaming of buying a home? Learn more about how changing interest rates can affect your mortgage payments.
Rate Increases Lead to More Costly Mortgages
Market fluctuations can raise or lower interest rates, which may impact your budget and purchasing power. Rising interest rates can also increase the cost of borrowing money to buy a house. Even a 1% increase may have significant implications on your personal finances. Let's examine the potential savings and costs of securing a mortgage with a 1% rate difference.
How Much Can A 1% Difference in Your Mortgage Rate Save Or Cost You?
While it may not appear substantial at first glance, even a 1% difference in your mortgage rate can result in significant accumulated savings or additional cost over the life of your loan.
Securing an interest rate that’s 1% lower, for instance, could translate into potential savings of thousands, or even tens of thousands of dollars in a single year. The exact amount would depend on several factors such as your overall mortgage interest rate, the purchase price and total mortgage amount being financed, and how quickly you pay off your loan.
In any case, even a small favorable change in your interest rate could potentially be sufficient to afford a new car, fund a college education, or finance significant home renovations. And, of course, the opposite is true; even slight hikes in your interest rate can have a significant impact on the total cost of your loan.
What Determines Mortgage Rates?
Mortgage rates can be influenced by a variety of factors. Knowing what they are may help you better understand your loan options. Here are some examples:
What Can You Do to Save on a Mortgage?
Did you know that the minimum mortgage payment in the U.S. is around $1,700 a month?1 Fortunately, you can take some steps to help save money, including:
If you'd like more information about how to make strategic decisions with your next home purchase, let’s schedule a meeting.
1) Tracey, Melissa. "The Average Monthly Mortgage Payment Is Above $2,300." Realtor Magazine, 4 May 2023, https://www.nar.realtor/magazine/real-estate-news/the-average-monthly-mortgage-payment-is-above-2300.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.