Why Understanding Mortgage Rates Could Save You $$$

Why Understanding Mortgage Rates Could Save You $$$

When it comes to buying a home, there’s one factor that can quietly cost (or save) you tens of thousands of dollars over time: it’s your mortgage interest rate.

It might seem like just a small percentage point here or there, but those tiny numbers make a huge difference over the life of your loan. A shift of even 0.5% in your rate can seriously impact the amount you pay over time.

Here’s an example: if you take out a $320,000 mortgage with a 30-year fixed rate at 6.6%, you’ll end up paying $415,734 in interest over the life of the loan.

But if you manage to get a 6.0% rate on that same exact mortgage, you’d pay only $370,682 in interest.

That’s a difference of $45,000… all because of a 0.6% difference in your rate! We’re talking about a lot of money.

This is why it’s so important to lock in the lowest interest rate you can before closing on your new home.

Here are a few smart ways to get the lowest possible interest rate on your mortgage:

• Maintain a strong credit score (700+): A higher credit score shows lenders you’re great at making payments which often earns you a better rate.

• Make a larger down payment: The more you put down upfront, the less risky the loan looks to the lender. This usually results in a lower interest rate!

• Keep your debt-to-income (DTI) ratio low: Lenders love to see that you have plenty of room in your budget after your debts are paid. Aim to keep your DTI under 36% for the lowest rate.

Understanding mortgage rates and what affects them is a powerful way to set yourself up for financial success with your new home.

If you want to chat more about what today's rates are looking like, or how to get yourself in the best possible position to buy, reply to this email, and let's connect!

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