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There’s always buzz around interest rates and how they affect mortgage payments. DCU provides a customized quote and guides you through the impact mortgage rates have on your loan.
In the market for a new home? With mortgage rates low, it certainly seems like the time to buy. And interest rates do make a big difference in how much you can expect to pay over the life of a mortgage. But rates are just one piece of the mortgage puzzle. Here’s what you need to know about mortgage rates and other home buying costs.
A Rate’s Impact on the Total Amount Paid
To see the impact of a mortgage’s interest rate over the life of the loan, let’s look at an example. Say you take out a 30-year mortgage on a $300,000 home and make a 6% down payment of $18,000. If your fixed mortgage rate is 4%, your loan payment without insurance or taxes would be $1,346 per month. Change the rate to 3% and your loan payment drops to $1,189. With a difference of $157 per month, that equals a total savings of $56,520 over the life of the loan — a pretty large number for a single percentage point change! Such an amount could pay for a major home renovation or make it easier to afford a property that would otherwise be just outside your price range.*
*This scenario is for example only. Rates, down payments and loan terms are for educational purposes and don’t necessarily represent DCU offerings.
Of course, as significant as the interest rate may be, the cost of a mortgage doesn’t start and end there. When thinking about whether you can truly afford a house, you should factor in the following costs:
Whether or not you qualify for the lowest interest rate available depends on several factors:
Your mortgage rate can make a big difference, so why stay in the dark about your potential interest rate? Calculate a customized rate quote today at the DCU Mortgage Center. To explore our mortgage options and apply online, visit our Mortgage Loans page.
1Source: USA Today.
2Source: Urban Institute.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.