My dream home would be close to the beach and have a pool. I chose
this house on Redfin.com, in Hallandale Beach, FL because it is on the
intercoastal and it also has a boat dock. The house is listed for
$5,850,000.
https://www.redfin.com/FL/Hallandale-Beach/113-Holiday-Dr-
33009/home/41994886?600390594=copy_variant&231528114=co
ntrol&1778901559=variant&utm_source=ios_share&utm_medium=s
hare&utm_nooverride=1&utm_content=link&utm_campaign=copy_li
nk
Assuming a 20% down payment, The loan amount would be
$4,680,000. a Current annual interest rate is 6.61% and the monthly
payment would be $29,920.15 for a 30-year term. The overall
amount of the interest paid over that time would be $6,091,254.31.
That is 1.3 times the amount of the original loan.
Variables
First, I decided to change the interest rate to the amount that we had
last year at this time of 3.10%. This decrease in interest reduced the
monthly payments about $10,000 to $19,984.37. a The total interest
paid would then be $2,514,372.29. Since the rate decreased by over
50% it makes sense that the total interest would decrease by that
amount. a
Then I thought let's see what would happen if I decreased the amount
of the down payment to 10% and 6.61% interest rate. a The total
interest paid is $6,852,661.10. So unless you can get a better rate of
return the best thing to do obviously is to stick with the higher down
payment.
Finally, I looked at what would happen if we could get a 15-year
mortgage. a The current rates are about 6.22%. Assuming a 20% the
total monthly payments increased to $40,050.91, this in mainly an
increase in the amount of principal included in the amortization. The
total interest is $2,529,163.76, because we are paying down the
principal faster there is less time to accrue more interest.
References:
Fred Economic Data| St. Louis Fed (2022, November 17), 30-Year
Fixed Rate Mortgage Average in the United States,
https://fred.stlouisfed.org/series/MORTGAGE30US
Stauffer, J (2022, October 22),15-Year Mortgage Rates for November
2022, https://time.com/nextadvisor/mortgages/15-year-mortgage-
rates/
