I am sure you have seen it everywhere; in the headlines, from realtors, from uncle Ben. It goes something like this “Mortgage rates have never been so low!” “ We are seeing record-breaking mortgage rates!” “There’s never been better mortgage rates.” I’m sure you get the gist, and yeah, it’s kind of a big deal, especially for first-time buyers. However, if you have never bought a home or aren’t sure what this even means, we are here to break it down for you. Let’s go over low mortgage rates in Dallas and what they mean.
Low Mortgage Rates In Dallas Means…
A decade before 2021, rates were over 6%. Today, they sit at around 2.8% and only a couple of years ago they were at 3.94%. For homebuyers, these numbers can be highly beneficial for one main purpose: lower mortgage payments. That’s right, low mortgage rates provide a lower monthly payment than you’d probably see 10 years ago or even a couple of years ago.
For example: Let’s say you get approved for a $200,000 mortgage loan and the interest rate for that loan is 2.87%. Your typical monthly payment would land somewhere around $829 per month (this does not include taxes and homeowners insurance). If you were to take out this same loan 3 years ago (2018) when the average rate was 4.54% you would be paying around $1,018 per month. That 2% decrease saves you a whopping $200 on your mortgage payment every month.
Less Interest, Less Overall Payment
When you pay less in interest, you pay less in the grand scheme of things. If you took out a 30-year loan of $200,000 with a 4.54% interest rate (2018) you would end up paying $166,530 solely on interest (crazy! right?) An interest rate 10 years ago (2011) would have cost you almost as much as buying the house twice by interest rate- paying roughly around $200,000 in interest over a 30-year period.
On the other side of the coin, if you were to take out that same loan with a 2.87% interest rate you would pay $98,530 in interest over those 30 years. It is still a bit of money, but it doesn’t compare to how it used to be only 3 short years ago.
Get more with your loan for less
In a nutshell, the way this works is that the money you would have spent on your interest, you are actually investing in an extra room, better furnishing and appliances, or a backyard with a pool. Essentially, you get more bang for your buck when mortgage rates are low. If it was 2018 and you got approved for a $300,000 loan, you would only be able to afford a $240,000 home because the interest rate would sit at almost 4%. The jump between 2.8% and 4% makes a huge impact on the kind of home you get, and how much you end up paying for it over a 30-year mortgage.