How do interest rates affect your mortgage?

Monthly Mortgage Payment

Each month when you make your mortgage payment you are paying a portion of your principal (the amount that you’ve borrowed), the interest that has accrued that month, your property taxes, homeowners insurance, and sometimes mortgage insurance. 

The length of your loan is a key determining factor to how much your mortgage payment will be each month. A shorter loan term means that you will have a higher payment because you will be paying more towards the amount that you borrowed each month. The interest rate also changes your payment. 

Interest Rate

The interest rate is directly related to the mortgage payment: the higher the interest rate, the higher the mortgage payment. Higher interest rates reduce the amount of money you can borrow and lower interest rates increase it.

Example: The interest rate on a $100,000 is 6% on a 30-year mortgage would be about $599.55 (roughly $500 interest payment + $99.55 principal payment). The same loan with an interest rate of 3% results in a monthly payment of $422 total. 

Getting a better interest rate can be key to keeping your payment low. Rates are currently at historic lows. Give me a call at (801) 971-3956 to discuss your interest rate and how we can lower it.