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If mortgage rates drop, monthly payments on the same loan amount would be more affordable.
Heres how much you would save if mortgage rates do go down.
Also here are creative ways homebuyers are paying lower mortgage rates in 2024.
Assuming you put 20% down, your mortgage principal would be $329,840.
Currently, the average 30-year fixed mortgage rate is 6.73%.
Experts often recommend keeping your housing costs below 30% of your gross income.
That would put rates at 5.73%, which is around the average from September 2022.
In that case, your mortgage payment without tax and insurance would be $1,921 monthly.
Youd save more than $200 per month compared to the current rates.
Someone making around $77,000 per year could then afford the median home.
The monthly payment on the same loan amount $329,840 would go down to $1,717.
This example will focus on a $600,000 home instead.
Youd need to make at least $124,000 per year to afford this home with the current rates.
If mortgage rates fall from 6.73% to 5.73%, youd save more than $300 per month.
Over a year, youd save almost $4,000.
The salary necessary to afford this home at these lower rates would be $112,000.
Someone making around $100,000 per year could afford this home at these rates.
Still, youll save money each month if mortgage rates fall.
Thats for a 30-year fixed-rate mortgage with a $50,000 down payment and no taxes or insurance.
Youd need to make around $52,000 annually to afford this home with the current mortgage rates.
If rates fall one percentage point, your monthly payment would decrease to $1,165.
Youd save more than $100 per month compared to the current average rate.
Over the 30-year life of the loan, that adds up to more than $36,000 in savings.
Thats more than $200 cheaper than your monthly payment at the current mortgage rates.
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