Mortgage FAQ: Will an Interest Rate Increase Really Matter That Much?
"I KEEP HEARING THAT NOW IS A GOOD TIME TO BUY OR REFINANCE SINCE THE INTEREST RATES ARE SO LOW. IF THE RATES WERE TO GO UP BY MAYBE BY A HALF A PERCENT, WOULD THAT REALLY MATTER THAT MUCH?"
Although a half a percentage point difference in rates may seem small, the savings in interest can be quite significant. As a very simple example, let’s compare two identical loans with the only difference being the interest rate. If you get a 30-year fixed-rate mortgage for $250,000 at a 4.5 percent interest rate, you’ll pay $206,017 in interest over the life of the loan. If you get a similar loan for the same amount and with the same terms—but with a 4.0 percent interest rate—you’ll pay $179,678 in interest over the life of that loan. That’s a savings of $26,500.
Of course, your ability to get a low rate will depend on a variety of factors including the type of loan you’re getting and your current credit profile, but when it comes to interest rates, even a small percentage could mean big savings. Also, you should keep in mind that the interest rates you hear about are usually national averages based on surveys of mortgage providers and the actual rate that you can get may be higher or lower than those figures.
For more information about interest rates, contact your mortgage professional.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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