ATLANTA - Historically speaking, mortgage rates are low, but they are inching up.
The interest rate is still below five percent, which is fantastic, but every little bit it goes up means a little more money tacked onto that new mortgage payment.
We're going to break it down so you can see the numbers. And this is will also show you why better credit is the best idea.
Let's start with this. Let's say you're buying a $200,000 house. You're getting a 30-year mortgage and putting 20 percent down.
Let's say you have amazing credit. And you can get a 3.5 percent interest. Congrats. Your mortgage payment, minus insurance, HOA fees, taxes etc. will be $718.47. It's what you owe the bank.
Now let's say you have average credit and you get a 4 percent interest rate. That raises your monthly nut to $763.86
OK, now let's say you have rocky credit and your interest rate is 4.5 percent. Now you're looking at $810.70 per month. One percentage point is an almost $100 difference each month.
So the takeaway is that a small rise in interest matters and keeping your credit score in good shape keeps your mortgage payment down.
But all of this said, rising rates don't mean rushing out to buy in May. Wait until June or later if you can. Houses fetch their biggest prices in May and start to cool off a little into June. I got my house late December which felt like a fire sale.