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Home buyers are waiting for mortgage interest to finally fall, may not have to wait much longer.
After they their highest point since 2000 last summer, mortgage rates have fallen by more than a full percentage point since then. And now they’re poised to fall even further. With a steady cooling inflation rate and a tick-up in unemploymentthe federal reserve is about to make the first cut in the federal funds rate in four years. When this happens, mortgage rates could also fall again.
Understanding these changing dynamics is essential for homebuyers entering the market now. However, there are crucial steps you need to take before you make an offer on a house, with budget calculation at the top of the list. With the average house price At around $427,000 right now, many buyers may be wondering what a $450,000 mortgage could cost them per month. Below, we calculate that potential cost right now — and what it could look like if interest rates drop.
See here how low the mortgage interest rate is that you can get today.
How much does a $450,000 mortgage cost per month?
The following calculations do not take into account homeowners insurance, state and local taxes, and private mortgage insurance (PMI)which can all vary widely depending on your specific borrower profile. Here are the principal and interest payments for a $450,000 mortgage, assuming you used the traditional 20% down payment ($90,000):
- Mortgage with a term of 15 years at 5.86%: $3,010.72 per month
- 30-year mortgage at 6.44%: $2,261.26 per month
While mortgage rates likely won’t immediately fall in line with the federal rate, here’s what borrowers can expect to pay for a 25 basis point cut:
- Mortgage with a term of 15 years at 5.61%: $2,962.56 per month
- 30-year mortgage at 6.19%: $2,202.55 per month
And here’s what they could pay if current rates were cut by half a percentage point:
- Mortgage with a term of 15 years at 5.36%: $2,914.82 per month
- 30-year mortgage at 5.94%: $2,144.51 per month
So not only are the mortgage payments on a $450,000 mortgage loan affordable in September, but they are also likely to get cheaper as the year progresses, making it worth paying now. best time to buy a house in several years.
Find out more about your current mortgage rate options online now.
Don’t forget the other costs
While the numbers above represent the principal and interest you would pay on a $450,000 mortgage, minus the down payment, those numbers alone do not represent your total monthly payment to your lender. Homeowners insurance can be paid up front each year or added to your mortgage and paid for you by your lender, which can significantly increase your monthly cost. Taxes can also cause that payment to increase, especially once local appraisals are completed. So be sure to ask the seller how much they are currently paying for insurance (including coverage amounts) and taxes to better determine what your potential mortgage payment will be in the future.
The heart of the matter
A $450,000 mortgage payment can cost qualified borrowers between $2,261.26 and $3,010.72 per month, depending on the loan term chosen. However, that amount doesn’t account for future interest rate reductions, which could result in lower payments. It also doesn’t account for insurance and tax costs, which could result in higher payments. So be sure to do your research and calculate all potential costs before agreeing to borrow this amount from a lender.
Start calculating your potential mortgage costs here.
