Mortgage rates are at an all-time low

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If you’ve been on the fence about buying a house, consider this: mortgage interest rates are at historical lows. What does that mean for a homebuyer?

  • A lower monthly payment

  • Can qualify for a higher priced home

  • Buy more house for the same cost

  • Save interest over time

Since January 2020, interest rates have dropped more than a full percentage point. That’s big news in the world of home buying. We asked Laura Hebert, Senior Loan Officer at Universal Lending, to run the numbers. The following scenarios show the savings a buyer would realize at today’s low rate.

In January 2020, a $600,000 home purchased with 20% down earned an interest rate of 4.125%. Today a buyer purchasing that same $600,000 home with 20% down earns an interest rate of 2.75%. The difference in the monthly payment is $366. Multiply that by 60 months and the amount of money saved is considerable: $32,244.

Equally compelling is the amount of interest a homebuyer pays on a loan with the lower interest rate. In the scenario described above, the buyer who purchased that $600,000 home last January will pay $250,590 in interest over 15 years. Purchased at the current rate, the interest paid over 15 years would be $161,476 — a savings of nearly $90,000.

The advantages of a lower interest rate hold true for homes at every price point. The difference in the monthly payment on a $400,000 home purchased with 20% down last January vs. that same home purchased this August at a lower rate is $244. Over 60 months, the homeowner saves $21,496 in monthly payments. And over the course of 15 years, the loan at 2.75% costs nearly $60,000 less in interest than a loan at 4.125%.

Please note that the above information is for comparison purposes. Interest rates may vary based on qualification status and are not an offer by Universal Lending to extend credit. 

If you’re contemplating a move, give us a call. We’ll help you weigh the pros and cons of selling and buying in today’s market. Laura Hebert of Universal Lending can help if you’re wondering how much “house” you can qualify for. You can reach her at lhebert@ulc.com or by calling the Universal Lending office at (303) 759-7356.

Rates this low won’t last forever. Let us know how we can be of service. And speaking of service, we’re pleased to share that we received the Five Star Professional Award again this year. 2020 makes 10 years in a row! Thanks for your support. We couldn’t do it without you.