So – because of yesterday’s blog and because rates shot up again this morning – I wanted to remind everyone of just how little rate increases of less than 1% affect someone’s payment.
1/2% Rate Increase = $150 Higher Payment For $500,000 Mortgage
The below table shows the effect of higher rates on monthly payments for a $100,000 mortgage.
A 1/2% increase in rates results in an increased payment of about $27 to $30 per month (higher rates result in higher payment increases).
NOTE: I am using a $100,000 balance because it makes the math easy for estimating the effect of higher rates on larger mortgages, e.g. A $200,000 mortgage will see 2 x $30 (worst case) per month increase if rates go up 1/2%; a $350,000 mortgage will see a 3.5 x $30 per month increase; a $600,000 mortgage will see a 6 x $30 per month increase, and so on.
For a $500,000 mortgage, a 1/2% increase in rates results in about a $150 per month increase (worst case) in payment.
A $1 million mortgage would see about a $300 per month increase.
So – is it time to panic?
Probably not. 😊
| Annual Percentage Rate (APR) | Monthly Payment (15 Year) | Monthly Payment (30 Year) |
|---|---|---|
| 3.00% | $690.58 | $421.60 |
| 3.25% | $702.67 | $435.21 |
| 3.50% | $714.88 | $449.04 |
| 3.75% | $727.22 | $463.12 |
| 4.00% | $739.69 | $477.42 |
| 4.25% | $752.28 | $491.94 |
| 4.50% | $764.99 | $506.69 |
| 4.75% | $777.83 | $521.65 |
| 5.00% | $790.79 | $536.82 |
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
