Heck, I cashed in on the low interest rates myself. Last fall, we refinanced the mortgage on our Spring Texas home and snagged a 3.5% interest rate for a term of 30 years. Cha ching!
Over the last 90 days, economic good news has caused the mortgage interest rate to increase a full percentage point. As investors shifted their portfolios from bonds to the stock market, mortgage interest rates have risen to the mid 4% range for a 30 year loan.
How much does the interest rate impact your monthly mortgage payment?
Using the following assumptions of a loan amount of $175,000 and a loan term of 30 years, here’s what your monthly payment for principal and interest would be based upon a 3.5%, 4.5%, and 5.5% interest rate:
3.5% interest rate – monthly principal and interest = $785.83
4.5% interest rate – monthly principal and interest = $886.70
5.5% interest rate – monthly prinicipal and interest = $993.63
Put another way, A loan amount of $197,000 at 3.5% is about the same monthly payment for principal and interest as a loan amount of $175,000 at 4.5%. The one percentage point increase in the 30 year interest rate cost you $22,000 in purchasing power.
Mortgage interest rates in the mid 4s are still good just not as good as the 3s. If you would like to purchase a Spring Texas home before interest rates increase to 5%, give us a call at 281.804.8626