When shopping for the ideal home, most people are primarily concerned with the property’s location, floor plan, and asking price – and all of these components are important. Yet, when determining whether or not a home may be in your preferred price range, the calculations should entail more than just the amount you can buy it for. One of these criteria is the interest rate that you will be charged on your home mortgage.
In looking at an example, let’s say that you are obtaining a home loan for $200,000 for 15 years, at 5%. In this case, your monthly payment would come to $1,581.59. If, however, the interest rate on the mortgage was just a quarter percent higher – at 5.25% – your monthly mortgage payment would increase to $1,607.76
While this roughly $26 per month increase may not initially seem like a big deal, when you factor that amount in, month after month, year after year, the difference comes to more than $4,700 over the life of the loan. Assuming a difference of just $26 per month over the life of a 30 year loan can have you paying more than $9,300.
With this in mind, it can be helpful to determine not just what your monthly mortgage payment may be, but also the total amount that you will pay for a home, before you move forward with an offer. And, if economic conditions allude to a rise in interest rates in the near future, it can be beneficial to lock in now at a lower rate. Doing so could end up saving you thousands of dollars – or more – over the life of your home loan.
If you are currently in the market for a new home in the Bakersfield or surrounding area, give us a call. We can help you to find the perfect abode, while also offering you a no obligation analysis of the value of your current property.