The home that I chose is in Eureka Springs, Arkansas. The house is
listed at $1,675,000. With a 20% down payment, the total financed
amount would be $1,340,000. According to Bankrate, the current
mortgage rate is 6.84%. On a 30-year mortgage loan, the monthly
payments will be $8,771.53. The total interest paid over the 30-year
term would be $1,817,751.11. The amount of interest would be more
than what the value of the house is.
I bought my house two years ago at an interest rate of 2.75%. I was
curious to see what impact it would have made compared to the
current rates. The payment for a 30-year loan with a 20%
downpayment is $5,470.43. That is $3,301.10 lower than the
payment at the current rate. The overall interest paid at the end of
the loan dropped from $1,817,751.11 to $629,355.46. Since the rate
decreased for about 1/3, it makes sense that the total interest also
decreased to about 1/3.
I was also curious to see what the downpayment would be if I wanted
the same payment of $5,470.43 (2.75% rate and 20% downpayment).
I would need to give a downpayment of 50% to be able to get a
payment of $5,482.21 with the current rate of 6.84%. The total
interest paid would be $1,136,094.44. Even with a higher
downpayment, the total interest paid on a rate of 6.84% is more than
the interest paid on a rate of 2.75%.
References
Mortgage Rates: Compare Today’s Rates. (n.d.). Bankrate. Retrieved
November 18, 2022, from
https://www.bankrate.com/mortgages/mortgage-rates/#mortgage-
industry-insights
Inc, Z. (n.d.). 390 Cobblestone Ln, Eureka Springs, AR 72631 | MLS
#1228074. Zillow. Retrieved November 18, 2022, from
https://www.zillow.com/homedetails/390-Cobblestone-Ln-Eureka-
Springs-AR-72631/90733657_zpid/?mmlb=g
