When you buy a home, you are basically paying two entities: the seller of the property you are buying, and your lender for the money you are using to buy the home. It is easy to focus on the price of a property because it is easily listed and communicated to all potential buyers. However, a loan is unique to each buyer and therefore the cost varies, so you may not hear as much about it. With all other things being equal, the chart below gives you a sense for how the mortgage interest rates affect your monthly mortgage interest and principal payment over the past several decades. As you can see, mortgage interest rates are currently at historical lows, which means you may pay less to borrow money today than your parents did.
- With interest rates still around 4.5%, now is a great time to look back at where rates have been over the last 40 years.
- Rates are projected to climb to 5.0% by this time next year according to Freddie Mac.
- The impact your interest rate makes on your monthly mortgage cost is significant!
- Lock in a low rate now while you can!
If you are thinking of buying, please reach out to me and I would be happy to introduce you to great local mortgage loan officers that can help you understand how much you may want to spend on your next home.