How Can Interest Rates Affect Your Mortgage Payment?

When you start the process of buying a home, one of the first steps is to get pre-approved for a home loan.  In the preapproval process the lender (often times a bank or credit union) will quote you an interest rate. According to Freddie Mac the average interest rate for January was 4.3{16e476496f5f3a73cb19f20a476d08f8bca71b0bf9338242f1d2bf6ed337f382} for a 30 year fixed rate mortgage.  Once you finalize your purchase (or close on your home) and begin making payments, the interest is a portion of each month’s payment.  A higher rate can mean you may pay more per month for the same house.  For example, if you changed the interest on a $200,000 house from 4.5{16e476496f5f3a73cb19f20a476d08f8bca71b0bf9338242f1d2bf6ed337f382} to 5.5{16e476496f5f3a73cb19f20a476d08f8bca71b0bf9338242f1d2bf6ed337f382}, you would be paying about $116 more a month. You can lock in a fixed rate mortgage before interest rates go up if you are seriously considering buying a home in the near future.  If not, you need to recognize that a rise in interest rates might affect how much you will be paying each month and therefore carefully consider your price range. Click here to contact us so we can connect you with a loan officer.

*This chart is for information purposes only.  It assumes a 5{16e476496f5f3a73cb19f20a476d08f8bca71b0bf9338242f1d2bf6ed337f382} down payment and a 30 year fixed rate mortgage.  The terms of you loan may vary.