Why Mortgage Interest Really Matters

Posted: October 5th, 2011 by Just Real Seattle

Home mortgage interest rates have hit record lows this year. A one point (1%) reduction in mortgage interest rate can shave 10 percent off a home’s cost. The following two example scenarios show approximately the same monthly payment but with a $50,000 difference in buying power:

  • 4.75% rate for $500,000 value = $2,600 monthly payment
  • 3.75% rate for $550,000 value = $2,550 monthly payment

For buyers, a loan pre-approval is absolutely crucial before beginning the home search process. Mortgage interest rates are constantly fluctuating, and a buyer cannot lock an interest rate without securing a home under contract first. Pre-approvals are free and take minimal time to complete.

For sellers, buyers should be motivated by lower interest rates. Being willing to contribute toward a buyer’s interest rate buy down could be a great marketing incentive.

For homeowners, you may be able to significantly reduce your monthly payment by hundreds of dollars by refinancing to a lower rate.

One Response to “Why Mortgage Interest Really Matters”

  1. June 20, 2011 at 2:21 pm, Mr WordPress said:

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