How much does 1% affect your monthly mortgage

So lets take an example of a $500,000 home.  That is close to the average price of a home in my area.  So how would a 1% increase in your interest rate increase your monthly payment?  On a 4% mortgage which you could easily get with good credit over the last decade your payment would be around $1900 with a 20% down payment plus taxes and insurance.  If that rate jumps to 5% your payment jumps to about $2150.  That is a $250 increase with nothing more that a single point increase.  Over the course of a 30 year loan, you will pay over $85,000 more for that home.  If you took $85,000 and invested it and received a $7.2 percent return on your investment each year, you would have a portfolio of about $680,000.  Lets just say that you didn't have $85,000 up front to invest but invested $250 a month for 360 months.  You would have about $315,000.  That is why it is so important to keep the best credit that you can and work with a highly qualified lender that has your best interest in mind.  Interest rates on are the climb so getting in as low as you can is a must.  We may never see rates like we did over the last decade and with the slight increases that we are seeing now, there are some great deals out there on homes as inventory sits.  

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