How much difference does 1% lower interest rate make in my mortgage payment?

9 01 2011

It’s way bigger than you might think.  Consider this:  You’re buying a $200,000 home in the Billings, Montana vicinity.  Assume your taxes are about 1.2% of the purchase price ($2,400/year, which is probably a little high) & your insurance is about 0.5% of your purchase price (about $600/year, which might be a little slim, depending on the age).  Assuming an FHA loan with 3.5% down (the minimum) & rates hovering near 4.75% for a 30 year fixed mortgage, your PITI would be $1,446/month.  If rates were 5.75% like they were a year or two ago & everything else the exact same, your PITI would end up being $1,567.  WOW!  Over $121/month savings.  That means you can buy about $24,000 more house for about the same payment! Holy Buckets, Batman!




2 responses

24 03 2011
Japan Crisis Causes Drop in U.S. Mortgage Rates « Kate Hamlin's Real Estate Blog

[…] not much, but every little bit helps.  Refer back to this article to help you understand how […]

27 06 2013
seo adelaide

Everything is very open with a very clear description of the
issues. It was truly informative. Your website is useful. Thank you for sharing!

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