{"id":36833,"date":"2021-08-31T09:37:56","date_gmt":"2021-08-31T17:37:56","guid":{"rendered":"https:\/\/www.hayden-homes.com\/?p=36833"},"modified":"2023-06-13T11:35:48","modified_gmt":"2023-06-13T19:35:48","slug":"blog-how-interest-rates-affect-mortgage-payments","status":"publish","type":"post","link":"https:\/\/www.hayden-homes.com\/blog\/blog-how-interest-rates-affect-mortgage-payments\/","title":{"rendered":"How Interest Rates Affect Mortgage Payments"},"content":{"rendered":"<p><a href=\"\/blog\/wp-content\/uploads\/2021\/08\/How-Interest-Rates-Affect-Mortgage-Payments.jpg\"><img loading=\"lazy\" class=\"alignright wp-image-36834\" src=\"\/blog\/wp-content\/uploads\/2021\/08\/How-Interest-Rates-Affect-Mortgage-Payments.jpg\" alt=\"How Interest Rates Affect Mortgage Payments\" width=\"639\" height=\"366\" \/><\/a>Over the past year, many new homebuyers jumped into the market to lock in a historically low interest rate before they rise. Even a one percent increase, in interest rates, can make a big difference! If you\u2019ve been debating whether to buy now or wait, here are some things to consider.<\/p>\n<h2>Mortgage Basics<\/h2>\n<p>A mortgage is a secured loan used to purchase a home or other real estate property offered by banks, credit unions, or other financial institutions. Your mortgage payment consists of four main parts: principal (the total amount borrowed minus your down payment), interest rate (the amount the bank charges), taxes, and home insurance. You may need to pay private mortgage insurance is you put down less than 20% down.<br \/>\nIf you want more information about mortgages, we deep dived on what exactly a <a href=\"https:\/\/www.hayden-homes.com\/homebuying-101-whats-a-mortgage\/\">home mortgage<\/a> is in this post<br \/>\nThere are two main types of mortgages: fixed and adjustable-rate. The type of loan you receive determines how your interest rate is calculated. Here\u2019s how changes in interest rates can affect your mortgage payment.<\/p>\n<h2>Why Interest Rates Matter<\/h2>\n<p>Interest rates are the amount of money a bank charges you to borrow money and they directly affect the size of your mortgage payment. Higher interest rates mean higher mortgage payments and vice versa.<br \/>\nIt\u2019s important to remember that interest rates are compounded so you pay interest on the interest that\u2019s accrued each month in addition to the principal balance! That\u2019s why it pays to find the lowest possible mortgage rate.<\/p>\n<h2>How Much Can a Percentage Point Make on Your Mortgage?<\/h2>\n<p>One point may not sound like a lot but it is.<br \/>\nLet\u2019s say you get a mortgage for $300,000 with a 30-year, fixed rate of 3.75%, this same loan will cost $500,270 with $200,270 in interest payments and a $1,390 mortgage payment.<br \/>\nIf you get the same loan with a 4.75% interest rate, you\u2019ll pay $563,789 in total over the life of your loan, with $263,789 going towards interest. Your monthly mortgage payment will be $1,566. This means you\u2019re spending $63,519 more over the life of your loan!<br \/>\nPlease note: this example is for illustrative purposes only. It does not include a down payment, taxes, insurance, or PMI. If you want numbers specific to your situation, please contact your lender.<br \/>\nWhen it comes to your mortgage, it pays to shop around. In short, mortgage rates matter \u2013 a lot! While a single percentage point may seem insignificant, it could end up being the difference of thousands of dollars over the life of your loan. This is why it\u2019s worth shopping around to find a favorable mortgage loan, especially if you\u2019re taking out a larger loan.<\/p>\n<h2>Finding the Perfect New Home<\/h2>\n<p>We offer affordable new homes that fit your needs at any stage in life. Our new home communities in <a href=\"https:\/\/www.hayden-homes.com\/state\/new-homes-idaho\/\">Idaho<\/a>, <a href=\"https:\/\/www.hayden-homes.com\/state\/new-homes-oregon\/\">Oregon<\/a>, and <a href=\"https:\/\/www.hayden-homes.com\/state\/new-homes-washington\/\">Washington<\/a> are backed by our commitment to quality. Visit us online at Hayden-Homes.com to learn what makes a Hayden home the right new home for you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Over the past year, many new homebuyers jumped into the market to lock in a historically low interest rate before they rise. Even a one&#8230;<\/p>\n","protected":false},"author":2,"featured_media":36834,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[87],"tags":[160,140],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.2.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Interest Rates Affect Mortgage Payments | Hayden Homes<\/title>\n<meta name=\"description\" content=\"Even though interest rates are low, even one percent can make a big difference! If you\u00e2\u20ac\u2122ve been debating whether to buy now or wait, here are some things to consider. Read more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hayden-homes.com\/blog\/blog-how-interest-rates-affect-mortgage-payments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Interest Rates Affect Mortgage Payments | Hayden Homes\" \/>\n<meta property=\"og:description\" content=\"Even though interest rates are low, even one percent can make a big difference! If you\u00e2\u20ac\u2122ve been debating whether to buy now or wait, here are some things to consider. 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