We all like to stretch our dollars. Whether it's buying an item on sale or getting a large coffee for the price of a small one, it feels good and makes financial sense. The same applies when it comes to shopping for mortgage rates – the lower the number, the better.
Let's say you've been working with your financial planner and pinpoint your “homeownership comfort zone” – a $200,000 loan, or a monthly mortgage payment that doesn't exceed $1,100.
Check out the two ways you can win with the power of lower mortgage rates.
Scenario 1: You can save your hard-earned dollars.
In the following scenario, using a $200,000 loan amount with a 30-year fixed-rate mortgage as the constant, you see the effects of varying rates on your monthly payment. Over the life of the loan, you can save tens of thousands of dollars with the lower rate.
|Lender||Interest Rate||Mortgage Payment* on $200,000 Loan||Life of Loan Cost|
Scenario 2: You can buy more home.
In the following scenario, you’re trying to keep your mortgage payment at $1,100. Here, you can see the power of lower mortgage rates and how they can help you buy more home – up to $13,000 more in one instance.
|Lender||Interest Rate||Mortgage Payment*||Life of Loan Cost|
*Payment does not include the cost of taxes and insurance
One of the most important things you can do when looking for a home is to shop around for the most competitive mortgage rate. Rates differ from lender to lender, just like the price of milk differs at different grocery stores. It’s advised that you talk with at least three lenders to compare rates, mortgage terms and fees. You’ll learn a lot in the process and will be glad you took the extra step.
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