I have chosen my dream home to be located in Pasadena, California. Pasadena is in Los
Angeles County and is home to where the Rose Bowl Game occurs every year. It is a
beautiful city with high mountaintops. The dream home I chose is located in these
mountains and is currently valued at $4.4 million.
Over the term of the loan, the overall amount of interest I paid was $4,939,302. This value
was of course more than the original loan amount at $3,492,000. Using Fred, I decided to
input an average interest date that was almost from a year ago. The interest rate I used was
2.98% on November 10, 2021. With the same 20% down payment, my lifetime payments
dropped by about $3,000,0000. Also my interest paid even dropped by so much. With a
2.98% interest rate, I paid $1,785,847 in interest. a I also decided to play around with the
interest rates that we saw in the middle of the pandemic. It is no brainer that if we have a
lower interest rate, with the same loan value, we are always going to pay less interest.
I then decided to play around with a 15% down payment and a lower interest rate. A lower
down payment means that the total loan amount will increase since I am putting less
money down towards the house. This change brought my lifetime payments down $2m,
but still is not as attractive as a 2.98% interest rate. The overall paid interest is still high at
$3,256,492, but this time it did not equal more than the principal.
This analysis shows how important it is to put enough money down towards a loan and
locking in a good mortgage rate. One slight difference in interest rates can save a huge
sum of money.
Source: https://www.zillow.com/homedetails/130-Patrician-Way-Pasadena-CA-
91105/20856499_zpid/?
