LIVE IN THE PAYMENT, NOT THE PRICE
Even as we continue to see record Covid-19 cases being reported, the metro Phoenix real estate market continues to be hot. Inventory is tight, interest rates are historically low and people are on the move. According to several real estate experts in the Valley, the market here in 2021 will be as strong as last year. No doubt about it—it’s an advantageous time to sell or buy a home.
That says something about the power of low interest rates which can significantly impact a monthly mortgage payment.
Here are two common mortgage situations based on loan duration:
Let’s say the purchase price of a home is $300,000, the 20% down payment is $60,000 and the total loan amount is $240,000 for a conventional 30-year fixed mortgage. At a 3.75% interest rate, the monthly payment would be $1,111.48; at a 3.50% rate, the monthly payment would be $1,077.71; at a 3% rate, the monthly payment would be $1,011.85; and at 2.75%, the monthly payment goes down to $979.78. Total savings estimate would be $47,411.49.
If you’re taking on a conventional 15-year fixed mortgage for the same home price, down payment and loan amount, the monthly mortgage payment would be $1,715.72 at a 3.50% interest rate; $1,686.41 at a 3.25% interest rate; $1,657.40 at a 3% interest rate; and $1,628.69 at a 2.75% interest rate. The total estimated savings would be $20,776.32.
If your down payment is less than 20%, it is standard practice for lenders to tack on a private mortgage insurance fee (0.55%-2.25% of the total loan) to the monthly mortgage payment to protect them from loan default.
Curious about what your mortgage options are? I know a variety of lenders who can assist you in navigating the current mortgage rates. Feel free to contact me at email@example.com or at 602-739-2385.