What are interest rates, and how do they affect your house payments?
I’m often asked about mortgage interest rates, so today I’ll explain what these interest rates are and how they affect you.
Interest rates are the cost that the bank charges you for the money that you’re borrowing. The average interest rate for a home loan has been sitting around 3%. If you get a $400,000 loan right now, you’ll pay about $12,000 per year in interest.
If interest rates rise to 4%, which is very likely, the same loan will cost you $16,000 per year. Interest rates are integral to the buying process but often overlooked because people are just thinking about the price of the house. When you’re planning long term, that extra 1% is a lot.
If you’re thinking of buying, take a look at buying now before interest rates rise. If you have any questions, don’t hesitate to reach out to me by phone or email. I look forward to hearing from you.