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How much mortgage rates impact your monthly payments

Stop and listen to how mortgage rates impact your monthly payments

If you are taking advantage of these phenomenally low rates and financing your real estate purchase you may be surprised to know how much mortgage rates impact your monthly payments. Everyone knows lower interest rates are better and will save you money. Not everyone realizes just how much though.

4.5% Interest rate vs 3%

Let’s say you bought a $500,000 home a few years back when interest rates were at 4.5%. You put 20% down and got a 30 year fixed loan. Your monthly Principle and Interest (P&I) payments would be about $2027 for the next 30 years.

Fast forward to 2020 with today’s low rates. Let’s say you buy a $600,000 home with 20% down. You do have to come up with a little more down payment than you did with the $500,000 home. However, if you can get a very realistic 3% rate, your monthly P&I would be about $2024. Almost the same payment as the $500,000 home cost at a 4.5% interest rate.

By my calculation, a 1.5% change in interest rates can equate to $80,000 – $100,000 in purchasing power. That’s pretty amazing.

A small change in interest rate can equate to a big change in purchase price.

Disclosure

We are real estate agents, we are not mortgage brokers. Mountain Living Real Estate cannot quote you current rates or payment scenarios. Besides, every situation is different. We simply plugged numbers into our mortgage calculator and came up with this scenario. Try it for yourself and see just how much mortgage rates impact your monthly payments. The results may surprise you.

Reduce your interest rate

So how can you reduce your interest rate? There are actually a few options.

  1. Pay points. That basically means buying a lower interest rate. You are paying the mortgage company now the amount they could collect over the years. Generally, you have to stay in your home, without refinancing,for several years to make this option worthwhile.
  2. Put more money down. Additional money down will lower the risk to the lender and generally net you a better interest rate. Simply going from 20% down to 25% down can reduce your rate substantially. Discuss your options with your lender to determine if it’s worth the additional money out of pocket.
  3. Improve your credit score. The higher your score the better interest rate you may be offered. A score higher than 740 can offer you the best rates available. Improving your credit score substantially can take a lot of work and time. Small improvements may be a realistic option if you are close to cracking the next credit score bracket.

Low interest rates boost your purchasing power. The low interest rate climate we are experiencing now gives people the ability to afford a more expensive home while keeping their monthly payments lower. Low interest rates are predicted to last for a while yet. There is, however, no guarantee.

Posted in: Buyer Tips Tagged: Interest Rates

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About Us

Mountain Living Real Estate, a.k.a. The Mountain Living Team, is a family owned, second generation, real estate company that has been helping buyers and sellers in Summit County since the early 90’s.  Mountain Living Real Estate is committed to going above and beyond to ensure their clients have the most amazing real estate experience possible.  Jason & Meredith take a personal approach to educate their clients, empowering them to make high quality decisions no matter the situation.  They take exceptional care throughout the sales process and beyond; striving to make each client’s path in Summit County one filled with fun, excitement & great memories.

Work with Mountain Living Real Estate and you’ll understand why so many people say, “We Love Mountain Living!”

Testimonials

View from Silverthorne

Professionally executed from start to finish

William from TX Mountain Living Real Estate November 25, 2020

Honest and realistic about pricing and negotiating. On the clients side for negotiations. Willing to go extra mile for anything we needed since we were out of state.

Kristin from VA Mountain Living Real Estate October 6, 2020

Thank you Jason and Meridith for all you did . We were very impressed from the start to the finish . Jason was very timely with his responses to any questions or concerns we had . His very calm and professional demeanor was most reassuring. The photos that Meridith took were professional grade . All Continue Reading

John from Idaho Springs, CO Mountain Living Real Estate October 2, 2020

Jason and Meredith exemplify what real estate agents should be.  We purchased two homes and sold one with them.  The attention to detail was outstanding.  It is rare in today’s world to find such a high level of customer service.   Jason and Meredith handle everything and go way above and beyond what other agents would do.  The online tools, calendar Continue Reading

Wendy from Pine, CO Mountain Living Real Estate September 14, 2020

La Riva del Lago

Thank you for going above and beyond to sell and help me close! You have been a great resource for us. We so appreciate it!

Sheila from KS Mountain Living Real Estate September 10, 2020

Most impressed with timeliness and response – working with us late in the evening. It was a pleasure. Appreciate the opportunity to work with you.

Kevin from Highlands Ranch Mountain Living Real Estate September 4, 2020

You did a wonderful job. You went up to the condo several times. Not only did you take pictures, but you set up the dining table, etc. for better showing. You came in for inspection follow up, etc. All much appreciated!! All the extra special touches and great communication from listing to closing meant a Continue Reading

Pat from Broomfield, CO Mountain Living Real Estate July 11, 2020

You went above and beyond our expectations to check out the Wetterhorn unit! You know what we like and saw the opportunity for us to purchase a unit we will enjoy!

Linda from Texas Mountain Living Real Estate June 30, 2020

Buffalo Ridge Condo

We were most impressed with the willingness to get the job done under difficult situations.

John from Manitou Springs, CO Mountain Living Real Estate April 13, 2020

January Sales get a Thumbs Up

Good communication and quick response. Knowledge of area and market. Pleasant attitude through it all.

Stacey from Texas Mountain Living Real Estate March 1, 2020

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Jason and Meredith Adams

Jason & Meredith Adams
Mountain Living Real Estate

101 Main St, #109, PO Box 4115 Frisco, CO 80443

(888) 666-0844
team@mountain-living.com
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