Rates Are Still Low
Prices of homes in the Seattle area markets have seen an upward swing. There are some homes in the market that are having multiple offers, causing sale prices to increase. The number of homes on the market is also at a five-year low. Interest rates are still at a 40-year historic low point. Last Friday the rate for a 30-year conventional loan was at 3.75%. What happens with your mortgage payment if there is a 1% increase in the interest rate for a 30-year mortgage?
If you are looking to buy a home valued at $200,000 with a 20% down payment, your mortgage payment at a 3.75% rate (which includes principal, interest, taxes, and insurance) would be $946.43 per month. With the interest at 4.75%, that same payment would be $1,040.09 per month. The difference is $93.66 or a 9.89% increase in the monthly payment. That equates to an extra $33,717.60 over the life of the loan.