Mortgage interest rates on the rise

interest rates on home loans increasingThe days of the 3% interest rates for 30 year mortgages are GONE.  For the last couple of years, buyers have been locking in interest rates for 30 year mortgages in the 3s and loving it.

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