Left Brain: Compare Your Numbers
The landscape has changed from unprecedented rates below 3% in 2019 to a current average rate of 4.84% (Sept 11, 2024) for a 5-year fixed mortgage. While this spread does not seem like much, its impact on your lifestyle may require some changes. Using an online mortgage calculator, play with the variables before you select the right mortgage for your specific circumstances.
Comparison: What will you change to handle the monthly $570 increase?
Mortgage Balance | Interest Rate for a 5 yr fixed | Amortization | Cost of Borrowing (Interest) | Monthly Payment |
$400,000 | 2.14% (2019) | 25 years | $39,322.19 for the term/ Estimated $116,284.81 for the 25 years (no consolidation) | $1,720 |
$400000 | 4.84% (2024) | 25 years | $90,540.60 for the term/ Estimated $287,033.96 for the 25 years (no consolidation) | $2,290 |
Right brain: Know what You Value Most
What is important to you will impact your choices, your approach to this process, and what you decide is a non-negotiable or a deal breaker. Your personal “values” determine how you spend money, save money, and what or how much you will exchange for your paycheck. Take a FREE Values Assessment at Tiermaker.
If a balanced life is critical, you will pay attention to your monthly mortgage payment. The frequency and amount of it will impact your monthly cash flow.
If you value freedom from debt at a specific stage, such as retirement, focus on reducing the years it will take to pay it off.
If borrowing costs feel like you are wasting your income paying interest, shorten the amortization period to pay it off quicker, make a more significant down payment, or buy a less expensive home.
You might value signing the best deal, so shopping for the best rate will take longer.
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