BRAGGING RIGHTS~~Holding Out For the BEST Mortgage Interest Rate

When I have a get together with family and friends and the topic of home buying comes around, it never fails that mortgage interest rates comes into the conversation.  There’s always one person who has an interest rate that BEATS everyone else’s at the table.

Interestingly, no one actually asks what the difference is in the actual monthly mortgage payment based on their AMAZING Interest rate number.  While we marvel at some of the rates that are put out there; the actual difference in monthly mortgage payment is what should be the tell all of whether you look at buying a home today or gamble on a better set of circumstances in the future.

Take for example this scenario.   You want to buy a home and find that in your desired area and desired size home, the average Sales price is about $300,000.00.  You start your search and talk to a Lender.  They tell you the current interest rate that’s out there and it’s 4 % for a 30 year loan.  You can qualify for an FHA loan at 3.5% down payment. Quick calculation says that your monthly principal and interest will be about $1382 per month.

Now you wait or when you start your search can’t find a home right away and the interest rate goes up to 4.5% by the time you actually find one.   You become nervous and think “Oh my gosh! I don’t want to buy now because the interest rate jumped so much!!!”.  But~~in reality~~the monthly principal and interest is $1466 per month.  Difference is about $84 more per month.

Although interest rates are just one factor in the Loan process; basing a purchase when you’ve met the criteria to buy everywhere else (Credit score, Debt to Income, job, etc..) may be a small enough hurdle when compared to your Ultimate goal of either finally being a Homeowner or getting into a new dream home.

Rates are predicted to go up.  To understand if buying a home means possibly giving one dinner a week or cutting down on a Starbucks run; you should sit with a Lender that can explain the differences and impact to your monthly payment.  Concern for the interest rate number may be less of an impact if you’re informed about how to get the best rate and what the actual difference is when you finally make your decision on the Perfect home.