I have said many times that loan interest rates are as important as the purchase price of a home. And I don't think anyone would dispute that. Yet, people consistently get hung up on the purchase price, and forget about interest rates.
Well, I am hoping to change that. In the last 48 hours, I saw one particular loan product go from a 4.75% interest rate, up to 5.5% overnight. Here are the numbers showing how that would affect a purchase loan of $500,000:
Loan Amount: $500,000
Ammortization Period: 30 years
4.75% interest rate = Monthly PI (principal & interest) payments of $2,608.24
5.50% interest rate = Monthly PI (principal and interest) payments of $2,838.95
- That's $230.71 more per month!
- That's $2,768.52 more per year!
- That's $83,055.60 more for the life of the loan!
Same house, same price, 2 different payments...
Food for thought.
Tiffany Wilson has lived in the South Bay of Los Angeles County for over 10 years. She and her family enjoy the safety and rich family features that the beach communities of the South Bay have to offer, including a close and neighborly community. Also, having experienced an out-of-country move to California over 10 years ago, she is perfectly positioned to assist out-of-state and foreign buyers in their search for real estate in the South Bay and the additional surrounding communities of Los Angeles and Orange County. She can be reached directly at tiffany.wilson@shorewood.com or 310-503-0557.
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