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Where Are Mortgage Rates Headed?

Where Are Mortgage Rates Headed?

The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to look at where rates are headed when deciding to buy now or wait until next year.

Below is a chart created using Freddie Mac’s February 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of 2015.

30-Year Fixed Rate Mortgage Projections | Keeping Current Matters

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

Research released by Zillow touched on this point:

“As rates rise, new home buyers will confront higher financing costs and monthly mortgage payments. For many, this will mean tightening their budgets and sacrificing some luxuries they may take for granted today.”

The experts predict that home prices will appreciate by 4.4% over the course of 2015. If both predictions become reality, families would wind up paying considerably more for their home.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth. Meet with a local real estate professional to evaluate your ability to purchase your dream home.


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1 reply
  1. Troy Erickson
    Troy Erickson says:

    A half percent increase in interest rate over 30 years (or the life of the new loan), and a 4.0 percent increase in home appreciation can make a significant difference on the monthly mortgage payment. For a $200k loan at 3.8% interest, the principal and interest payment would be $931.91. Based on the estimates, that same home would cost $208k, and the interest rate on the loan would be 4.3%, making the P&I payment $1,029.33. That is a difference of about $100/mo, or $1,200 each year. For a $300k home, that difference increases to almost $150/mo, or $1,800/year.

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