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Mortgage Rates Still at Record Lows!

Mortgage Rates Still at Record Lows!

Fulbrook on Fulshear Creek - Monday, November 30, 2020

Thinking about buying a new home? Now is a great time to take advantage of historically low interest rates. Low mortgage rates give a boost to your budget by increasing your purchasing power. Here’s an example of how you can save, as explained in a recent article by the Houston Association of Realtors: 

Imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.

Now let’s assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That’s a budget increase of $35,000!

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That’s $76,000 over your original budget! All because the interest rate fell by two percentage points. If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home. 

The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. The bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage / HAR

Loan Amount

4.0%

3.0%

Monthly Savings

Savings Over 30 Years

$100,000

$477

$422

$55

$20,093

$200,000

$955

$843

$112

$40,184

$300,000

$1,432

$1,265

$167

$60,277

$400,000

$1,910

$1,686

$224

$80,368

$500,000

$2,387

$2,108

$279

$100,461

 

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