February 12th, 2015 9:19 AM by Jackie A. Graves
National average 30-year fixed
rate mortgage interest rates have been under five percent for over five years.
They should stay low forever, right?
Economists predict that the
soaring economy, improved job outlook and ebullient consumer confidence will
cause the Federal Reserve to start raising overnight borrowing rates to banks.
Mortgage interest rates will become volatile, and things can change quickly for
To illustrate changing mortgage interest rates and
their impact on your monthly payment, consider what a difference even a small
dip and rise in interest rates means to you.
In December 2014, the
median-priced home in the U.S. was $209,500, according to the National Association of REALTORS®. If
you purchased this home for $200,000 and with 20 percent down and a benchmark
fixed-rate mortgage with the December national average commitment rate of 3.86
percent (Freddie Mac), your payment would be $751.01 a month.
You'll make 360 total payments
of $270, 362.59, with $110,362.59 in interest over the term of the loan.
The same home with the same
loan on February 5 would be very different. The national average commitment rate
is 3.59 percent, your payment is 726.53 and your total payments add up to
$261,552.16 and 101,552.16 in interest.
The difference isn't much --
just under $25 a month and $8,810 in round numbers.
But what if interest rates go
up as economists predict? The January 2015 outlook by Kiplinger's predicts that
interest rates could go as high as 4.9 percent. What would your monthly
payments look like then?
Your monthly payment would be
$849.16, for a total of $305,698.59, and interest payments of $145,698.59, a difference
of $122.63 monthly and $44,146.43 in interest by the end of the loan.
If you're interested in buying
a home, mortgage rates are
unlikely to stay low much longer.
By Blanche Evans | To view the
original article click here