Recent Mortgage Rate Hikes: The Tea on What It Means for Homebuyers
Finding the right mortgage can be overwhelming, especially with the current trends in interest rates. But fear not! I'm here to guide you through these recent changes and help you understand what they mean for home buying.
Let's start with the 30-year mortgage rates, which have slightly increased. Last week, borrowers paid an average rate of 7.33%, but this week it's up a tad to 7.44%.
Now, you're probably wondering how this affects your wallet.
For example, if you were to take out a $100,000 mortgage with a 30-year fixed-rate loan at the current average interest rate of 7.44%, your monthly payment, including principal and interest (taxes and fees not included), would be around $695. Over the life of the loan, you'd pay about $150k in total interest.
15-year mortgage rates have also seen a similar increase. Today's 15-year fixed rate is 6.67%, up from 6.56% last week. With a 15-year fixed-rate mortgage at 6.67%, a $100,000 loan would cost you around $881 per month in principal and interest. But the total interest paid in this scenario would be roughly $58k.
But what if you're in the market for a larger loan? For jumbo mortgage rates, the current average interest rate on a 30-year fixed-rate jumbo mortgage is 7.20%, up from 7.14% last week. Today's jumbo loan rate on a $750,000 loan, your monthly principal and interest payment would be around $5k. Over the life of the loan, you'd pay about $1 million in total interest.
Now, before you get too worried about the numbers, let's take a step back and talk about true affordability. Calculating affordability involves considering your income, debt, debt-to-income ratio (DTI), down payment, and credit score. Different loan programs and mortgage points can also provide a lower rate than what's presented above.
So, there you have it! With this information in hand, you're better equipped to make informed decisions about your mortgage options.