Your cost for waiting to buy a home: $46,000 in mortgage interest

In an 7/22/13 article by Brian O’Connell on TheStreet.com:

” By waiting until this summer to buy a home, fence-sitters may have added tens of thousands of dollars to their home price.

That’s because mortgage rates are moving upward, and at a fairly aggressive pace.

According to the BankingMyWay Weekly Mortgage Rate Tracker, 30-year fixed rate mortgages shot up again last week to 4.63% from 4.46%. In May and June, mortgages rates shot to 4.6% from around 3.5% in the past 60 days, to the highest levels since 2011, costing new homebuyers a fortune in the process.

How much are they potentially losing? Let’s let the BankingMyWay Mortgage Calculator do the math:

Before May 1

Mortgage amount: $200,000
Term: 30-years, fixed rate mortgage
Interest rate: 3.50%
Monthly payment: $898.09
Total payments: $323,311.97
Total interest: $123,311.97

Since July 10

Mortgage amount: $200,000
Term: 30 years, fixed-rate mortgage
Interest rate: 4.6%
Monthly payment: $1,025.29
Total payments: $369,103.49
Total interest: $169,103.49

That’s an extra $127 per month in mortgage payments, and approximately another $46,000 in mortgage interest payments over the course of 30 years — all by waiting 70 days to buy a new home.

The trend is not just bad news for new homebuyers; it’s a negative trend for homeowners looking to sell, as the rise in mortgage rates slows down the housing market’s recent momentum.

That hasn’t happened yet, but if mortgage rates continue to rise — and many economists think they will — fewer buyers may want to wade into a market roiling with high interest rates.”

Posted on July 22, 2013 at 8:34 pm
Nancy Low | Category: News

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