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4.40 vs. 3.55: The Difference a Year Makes in Interest Rates

  • August 8th 2013

by Shilpi Paul

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4.40 vs. 3.55: The Difference a Year Makes in Interest Rates: Figure 1

One year ago, the average on a 30-year fixed-rate mortgage was 3.55 percent. On Thursday morning, Freddie Mac reported 4.40 percent with a 0.7 point as the average. So, how would the difference impact your mortgage payments?

Using this $839,000, three-bedroom rowhouse in Kent, we took a look at the difference in monthly payments, based on the today’s interest rates as compared to last year’s.

Let’s assume that in each case, the homeowner puts down 20 percent and takes out a loan for the remaining $671,200.

Here are the two interest rate scenarios.

August 2012: The average mortgage rate was 3.55 percent.

Monthly Mortgage Payment: $3,032
Total Outlay on Mortgage (Payment x 360 months): $1,091,520

August 2013: The average mortgage rate is 4.40 percent.

Monthly Mortgage Payment: $3,361
Total Outlay (Payment x 360 months): $1,209,960

So, the difference between a rate of 3.55 percent and 4.40 percent is about $329 a month or $118,440 over the life of the loan.

Here’s a look at the path of rates since January 2010:

4.40 vs. 3.55: The Difference a Year Makes in Interest Rates: Figure 2

See other articles related to: mortgage rates

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/4.40_vs._3.55_the_difference_a_year_makes/7432.

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