Will you be buying a home in 2011? I think you should know that 'sooner than later' should be your resolution.
Below is an example of what happens when the interest rate increases. As you will see a 1% increase in rate reduces your loan amount by $28,000. So the choices would be an increase in monthly payment or decrease in loan amount. No matter what the price point this will carry true throughout...
Example One - Reduced Sale Price
Purchase Price | Interest Rate | Principal & Interest |
$250,000 | 4% | $1151.76 |
$235,500 | 4.5% | $1151.48 |
$222,000 | 5% | $1150.03 |
Note: Based on 30 year loan term, 3.5% down payment and includes Principal and Interest only. Does not include mortgage insurance, taxes, homeowners insurance which will increase payment further. |
Example Two - Increased Payment
Here is an example of how your payment will increase if the loan amount stays the same and the interest rate increases. As you will see a 1% increase in rate increases your monthly payment by $143.32.
Purchase Price |
Interest Rate |
Principal & Interest |
$250,000 | 4% | $1151.76 |
$250,000 | 4.5% | $1222.38 |
$250,000 | 5% | $1295.08 |
Note: Based on 30 year loan term, 3.5% down payment and includes Principal and Interest only. Does not include mortgage insurance, taxes, homeowners insurance which will increase payment further. |
Leave A Comment