- Real Estate in Oakland, Berkeley and Piedmont, California - http://homesintheeastbayhills.com -

What does an increase in interest rates do to my mortgage payment?

OK, so you are a first time buyer looking to purchase a home.  In the Oakland Montclair and Oakland Hills areas the average entry level home is around $600,000.  If you were to purchase an average Oakland Montclair home with a 20% down payment  and a loan of 80% at an interest rate of 5.375%, your payment (not including taxes and insurance) would be around $2687 per month.

Now imagine the same Oakland Montclair home, the same $600,000 purchase price and the same 80% loan.  Now however the interest rates have gone up by 1%.  That small 1% increase in interest rate is going to increase your monthly payment by an enormous $306 per month.   

At today’s interest rates of (5.375% 30yr fixed) for every $100k you borrow your monthly payment is about $559/month.  If you purchase your home at a lower interest rate by just 1 percent, that means that you could borrow about $50,000 dollars more and still have a lower payments!

If you really want to get down to loan nitty-gritty I recommend that you should call a good local mortgage broker.  Ask them to run a couple of scenarios for you.  I’ve recently had some great working experience with Brian Moggan at MetLife Home Loans (510) 339-4400 or BMoggan@MetLifeHomeLoans.com [1] .  I don’t have a vested interest in you calling him, I just know that he offers good loan products at good rates and provides  great service.

CONTACT BRIAN [2] if you have any real estate needs in Oakland, Berkeley or Piedmont CA.