Mortgage Rates Climbing

With rates reaching 6 ¾ % last week, ($6.49 per thousand mortgaged for 30 years) buyers must be wondering if they need to wait for prices to come down more, or if they should buy now due to rising rates.  The chart below demonstrates the differences between purchasing now, comparing the costs of  a 6%  or 8%  rate, for a 30 year mortgage.  This chart includes principal and interest only.

 

Mortgage Amount                    6%                   7%                   8%

 

$100,000                                 $600                $665                $734

$200,000                                 $1200              $1330              $1468

$300,000                                 $1800              $1995              $2202

$400,000                                 $2400              $2660              $2936

 

It is important to note that while you may be waiting for homes to drop another $10,000, climbing rates will offset any savings you may be able to take advantage of. If you locked in a 30 year mortgage today at 6.75% , your payment would be $1,947.  If rates, however, were to climb to 7.75%, your monthly payment would increase by $201. If you were to stay in that home for 7 years and did not refinance, your  payments would cost you an extra $16,884, based on a 1% mortgage rate increase.  If rates increase 2%, you just spent an extra $33,768.

 Buy now!

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