Live in the Payment, Not the Price

Updated: 4 days ago

Mortgage rates are at historic lows, but these changing rates can and will impact your monthly mortgage payments. Instead of looking at the price of the house, I’d recommend factoring out your potential payments for a better idea of the actual cost and potential savings. To give you an idea, below are two common mortgage scenarios that show the differences between down payment amounts, interest rates, and potential savings by end of term.

NOTES:

Keep in mind that the payments in both of the sample mortgage scenarios below exclude mortgage insurance, property tax and homeowners insurance.


Also, a down payment that’s under 20% will require mortgage insurance. Lenders tack this amount onto the principal of the loan to protect themselves from default, and it can be divided up and added to your monthly payment.


Scenario 1:

Home Purchase Amount: $400,000

20% Down Payment: $80,000

Loan Amount: $320,000

Closed 5-Year Fixed Mortgage (25-Year Amortization)


Interest Rate Payment (Difference between total principal and interest paid for the highest and lowest rates)

5.00% $1,861.00

4.50% $1,771.00

4.00% $1,683.00

3.50% $1,598.00

3.00% $1,514.00


Total Savings With Lowest Rate by End of Term (20% Down Payment): $20,805


Scenario 2:

Home Purchase Amount: $400,000

5% Down Payment: $20,000

Mortgage Insurance: $15,200

Loan Amount: $395,200

Closed 5-Year Fixed Mortgage (25-Year Amortization)


Interest Rate Payment (Difference between total principal and interest paid for the highest and lowest rates)

5.00% $2,210.00

4.50% $2,103.00

4.00% $1,999.00

3.50% $1,897.00

3.00% $1,798.00


Total Savings With Lowest Rate by End of Term (5% Down Payment): $24,706


Are you wondering what your mortgage options could look like? Contact me with all your questions, I’m here to help! ejungas@royallepage.ca or phone 1-905-229-9500


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