The Current Interest Rate and Its Importance
The only way to explain how interest rates can impact you in a major way is to show an example.
$200,000 loan for 30 years at 4.5% = $1014 per month *(not including PMI, Taxes, Insurance).
$200,000 loan for 30 years at 5.0% = $1074 per month*.
The interest rate increasing just half a percent increases your monthly mortgage payment by $60! Perhaps this doesn’t seem like a lot to you, but over the course of the mortgage, you will spend an extra $21,600!
Right now, the current rate is fluctuating between 4.375% and 4.50%. As the market improves, the rates will increase.
$200,000 loan for 30 years at 4.375% = $998 per month*.
The fluctuation between 4.375% and 4.50% is $16/month. Again, this may not seem like a lot, but over time it really adds up! Over the course of a year, this is an extra $192 absolutely WASTED on interest. That is at least 48 gallons of gas that you pumped onto the ground rather than in your car!
What is the takeaway from all of this? The current interest rate is important! Interest rates are still at historically low levels and will be for some time. However, it is wise to remember than anything below 8% is historically AMAZING. The current interest rate is important to you because every increment takes away your hard earned dollars. The market is improving, and interest rates are rising!
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