U.S. home prices have kept on climbing in the pandemic housing boom, leaving many potential buyers wondering how they can afford a place of their own in this red-hot market. After a period of stability in the years following the 2008 housing crash, the current development is a steep departure from the previous trend.
According to the St. Louis Fed, median prices for U.S. houses rose from approximately $323,000 at the start of the coronavirus pandemic to around $429,000 in Q1 of 2022. Over the same time period, U.S. inflation hit 11.5 percent. But this makes the average house price still $68,000 higher than in early 2020 even when adjusting for the measure.
You will find more infographics at Statista
Because housing is in such high demand, buyers outnumber supply, causing prices to soar. Because housing now promises sizable returns, it is also attracting investors. They bought a record share of homes in the United States last year, putting further pressure on the market.
Housing demand in the U.S. used to follow a cyclical pattern, but this has been upset by the pandemic. Home sales typically heated up in the summer, when houses were sold faster, and cooled down in winter. In 2020, however, a home buying frenzy ensued in spring, when the availability of housing dipped, followed by another, longer dip of supply in the fall.
In 2021, the summer availability dip turned into a veritable trough lasting throughout most of the year. While house listings still peaked at the turn of the year in 2022, houses remained on the market at their supply peak about as long as they would have in a hot summer market in in 2017, ’18 or ’19.
According to Marketwatch, the pandemic housing market actually collided with other, longer-term developments that were already putting pressure on U.S. home supply. Mortgage rates that are once again rising are causing Americans to stay put rather than move. Also, homeowners are older now than they used to be, but are more likely to “age in place” instead of downgrading, snowbirding or moving into retirement communities.
The average time between moves had already reached a high of 13.5 years in 2020, increasing from just around ten years in 2012. This number only started to decrease again with the onset of the pandemic – which caused the great reshuffle in the housing market that is now also coming at a great cost for buyers.
This article originally appeared on Statista.com and was syndicated by MediaFeed.org.
More from MediaFeed:
States where mortgage rates are rising most
Since the start of the year, mortgage rates have risen dramatically. The record-low rates of 2021 are gone, with rates above 5% becoming standard.
While a lower rate can make paying off a mortgage more affordable, it can be difficult to picture how much a higher rate can impact payments for new buyers. With that in mind, we used data collected from LendingTree users to put a dollar amount on how rising rates can affect the cost of a mortgage.
Specifically, we calculated the difference between average monthly mortgage payments on 30-year, fixed-rate loans in each state based on average APRs in January and April 2022.
We found rising APRs could potentially cost new borrowers across the U.S. hundreds of dollars a month — or more than $100,000 over the lifetime of the loans.
Lordn / iStock
- 30-year, fixed-rate mortgage APRs have increased by an average of 1.46 percentage points across all 50 states since January. In January, the average APR across the 50 states was 3.79%. In April, it was 5.25%.
- Nationwide, rising APRs are causing new mortgage payments to increase by an average of $258.57 a month. To put that figure into perspective, that monthly increase amounts to an average of $3,102.82 in extra costs each year and an average of $93,084.60 in extra costs over the lifetime of a 30-year loan.
GaudiLab / istockphoto
- Average mortgage amount (2022): $241,517
- Average APR (January 2022): 3.94%
- Average APR (April 2022): 5.33%
- Monthly payment with January APR: $1,145.37
- Monthly payment with April APR: $1,344.91
- Difference between payments with January APR and April APR: $199.55
- Extra amount paid each year: $2,394.57
- Extra amount paid over 30-year lifetime of mortgage: $71,837.24
dypics
- Average mortgage amount (2022): $207,300
- Average APR (January 2022): 3.86%
- Average APR (April 2022): 5.47%
- Monthly payment with January APR: $972.81
- Monthly payment with April APR: $1,173.63
- Difference between payments with January APR and April APR: $200.81
- Extra amount paid each year: $2,409.75
- Extra amount paid over 30-year lifetime of mortgage: $72,292.44
DepositPhotos.com
- Average mortgage amount (2022): $224,562
- Average APR (January 2022): 3.91%
- Average APR (April 2022): 5.41%
- Monthly payment with January APR: $1,060.20
- Monthly payment with April APR: $1,262.48
- Difference between payments with January APR and April APR: $202.28
- Extra amount paid each year: $2,427.35
- Extra amount paid over 30-year lifetime of mortgage: $72,820.49
Thomas Kelley
- Average mortgage amount (2022): $229,615
- Average APR (January 2022): 3.99%
- Average APR (April 2022): 5.46%
- Monthly payment with January APR: $1,094.85
- Monthly payment with April APR: $1,297.46
- Difference between payments with January APR and April APR: $202.61
- Extra amount paid each year: $2,431.31
- Extra amount paid over 30-year lifetime of mortgage: $72,939.41
eyecrave
- Average mortgage amount (2022): $240,729
- Average APR (January 2022): 3.89%
- Average APR (April 2022): 5.34%
- Monthly payment with January APR: $1,134.58
- Monthly payment with April APR: $1,342.39
- Difference between payments with January APR and April APR: $207.81
- Extra amount paid each year: $2,493.75
- Extra amount paid over 30-year lifetime of mortgage: $74,812.57
FierceAbin
- Average mortgage amount (2022): $233,618
- Average APR (January 2022): 3.84%
- Average APR (April 2022): 5.34%
- Monthly payment with January APR: $1,094.46
- Monthly payment with April APR: $1,302.44
- Difference between payments with January APR and April APR: $207.98
- Extra amount paid each year: $2,495.81
- Extra amount paid over 30-year lifetime of mortgage: $74,874.24
JoeChristensen
- Average mortgage amount (2022): $246,672
- Average APR (January 2022): 3.81%
- Average APR (April 2022): 5.25%
- Monthly payment with January APR: $1,150.64
- Monthly payment with April APR: $1,361.51
- Difference between payments with January APR and April APR: $210.87
- Extra amount paid each year: $2,530.48
- Extra amount paid over 30-year lifetime of mortgage: $75,914.27
Rdlamkin
- Average mortgage amount (2022): $244,039
- Average APR (January 2022): 3.87%
- Average APR (April 2022): 5.32%
- Monthly payment with January APR: $1,146.85
- Monthly payment with April APR: $1,358.25
- Difference between payments with January APR and April APR: $211.41
- Extra amount paid each year: $2,536.87
- Extra amount paid over 30-year lifetime of mortgage: $76,106.02
haveseen
- Average mortgage amount (2022): $235,123
- Average APR (January 2022): 3.88%
- Average APR (April 2022): 5.39%
- Monthly payment with January APR: $1,106.18
- Monthly payment with April APR: $1,318.74
- Difference between payments with January APR and April APR: $212.57
- Extra amount paid each year: $2,550.80
- Extra amount paid over 30-year lifetime of mortgage: $76,524.00
stevegeer
- Average mortgage amount (2022): $236,701
- Average APR (January 2022): 3.90%
- Average APR (April 2022): 5.42%
- Monthly payment with January APR: $1,116.79
- Monthly payment with April APR: $1,331.47
- Difference between payments with January APR and April APR: $214.67
- Extra amount paid each year: $2,576.09
- Extra amount paid over 30-year lifetime of mortgage: $77,282.68
f11photo
- Average mortgage amount (2022): $237,849
- Average APR (January 2022): 3.84%
- Average APR (April 2022): 5.36%
- Monthly payment with January APR: $1,113.23
- Monthly payment with April APR: $1,329.12
- Difference between payments with January APR and April APR: $215.89
- Extra amount paid each year: $2,590.72
- Extra amount paid over 30-year lifetime of mortgage: $77,721.61
DepositPhotos.com
- Average mortgage amount (2022): $242,175
- Average APR (January 2022): 3.91%
- Average APR (April 2022): 5.40%
- Monthly payment with January APR: $1,144.20
- Monthly payment with April APR: $1,360.39
- Difference between payments with January APR and April APR: $216.19
- Extra amount paid each year: $2,594.33
- Extra amount paid over 30-year lifetime of mortgage: $77,829.79
James Deitsch
- Average mortgage amount (2022): $264,716
- Average APR (January 2022): 3.91%
- Average APR (April 2022): 5.29%
- Monthly payment with January APR: $1,250.17
- Monthly payment with April APR: $1,468.73
- Difference between payments with January APR and April APR: $218.56
- Extra amount paid each year: $2,622.68
- Extra amount paid over 30-year lifetime of mortgage: $78,680.27
SeanPavonePhoto
- Average mortgage amount (2022): $261,988
- Average APR (January 2022): 3.84%
- Average APR (April 2022): 5.30%
- Monthly payment with January APR: $1,226.36
- Monthly payment with April APR: $1,454.96
- Difference between payments with January APR and April APR: $228.60
- Extra amount paid each year: $2,743.18
- Extra amount paid over 30-year lifetime of mortgage: $82,295.27
Michael Pham
- Average mortgage amount (2022): $275,815
- Average APR (January 2022): 3.96%
- Average APR (April 2022): 5.35%
- Monthly payment with January APR: $1,310.17
- Monthly payment with April APR: $1,540.15
- Difference between payments with January APR and April APR: $229.98
- Extra amount paid each year: $2,759.77
- Extra amount paid over 30-year lifetime of mortgage: $82,793.18
Swarmcatcher
- Average mortgage amount (2022): $284,989
- Average APR (January 2022): 3.85%
- Average APR (April 2022): 5.22%
- Monthly payment with January APR: $1,336.08
- Monthly payment with April APR: $1,569.06
- Difference between payments with January APR and April APR: $232.98
- Extra amount paid each year: $2,795.78
- Extra amount paid over 30-year lifetime of mortgage: $83,873.37
AnujSahaiPhotography
- Average mortgage amount (2022): $256,150
- Average APR (January 2022): 3.85%
- Average APR (April 2022): 5.39%
- Monthly payment with January APR: $1,200.69
- Monthly payment with April APR: $1,436.51
- Difference between payments with January APR and April APR: $235.82
- Extra amount paid each year: $2,829.85
- Extra amount paid over 30-year lifetime of mortgage: $84,895.41
DenisTangneyJr
- Average mortgage amount (2022): $259,503
- Average APR (January 2022): 3.74%
- Average APR (April 2022): 5.29%
- Monthly payment with January APR: $1,201.01
- Monthly payment with April APR: $1,439.73
- Difference between payments with January APR and April APR: $238.72
- Extra amount paid each year: $2,864.63
- Extra amount paid over 30-year lifetime of mortgage: $85,938.78
marekuliasz
- Average mortgage amount (2022): $257,718
- Average APR (January 2022): 3.74%
- Average APR (April 2022): 5.30%
- Monthly payment with January APR: $1,191.50
- Monthly payment with April APR: $1,431.27
- Difference between payments with January APR and April APR: $239.77
- Extra amount paid each year: $2,877.24
- Extra amount paid over 30-year lifetime of mortgage: $86,317.29
sequential5
- Average mortgage amount (2022): $257,301
- Average APR (January 2022): 3.53%
- Average APR (April 2022): 5.12%
- Monthly payment with January APR: $1,159.84
- Monthly payment with April APR: $1,400.81
- Difference between payments with January APR and April APR: $240.97
- Extra amount paid each year: $2,891.61
- Extra amount paid over 30-year lifetime of mortgage: $86,748.31
Rex_Wholster
- Average mortgage amount (2022): $283,885
- Average APR (January 2022): 3.77%
- Average APR (April 2022): 5.22%
- Monthly payment with January APR: $1,318.18
- Monthly payment with April APR: $1,562.45
- Difference between payments with January APR and April APR: $244.27
- Extra amount paid each year: $2,931.27
- Extra amount paid over 30-year lifetime of mortgage: $87,938.13
JoeChristensen
- Average mortgage amount (2022): $260,309
- Average APR (January 2022): 3.87%
- Average APR (April 2022): 5.44%
- Monthly payment with January APR: $1,223.50
- Monthly payment with April APR: $1,467.85
- Difference between payments with January APR and April APR: $244.35
- Extra amount paid each year: $2,932.22
- Extra amount paid over 30-year lifetime of mortgage: $87,966.60
Davel5957
- Average mortgage amount (2022): $273,634
- Average APR (January 2022): 3.80%
- Average APR (April 2022): 5.31%
- Monthly payment with January APR: $1,274.68
- Monthly payment with April APR: $1,520.68
- Difference between payments with January APR and April APR: $246.00
- Extra amount paid each year: $2,951.99
- Extra amount paid over 30-year lifetime of mortgage: $88,559.58
AppalachianViews
- Average mortgage amount (2022): $299,992
- Average APR (January 2022): 3.84%
- Average APR (April 2022): 5.24%
- Monthly payment with January APR: $1,405.51
- Monthly payment with April APR: $1,655.09
- Difference between payments with January APR and April APR: $249.59
- Extra amount paid each year: $2,995.05
- Extra amount paid over 30-year lifetime of mortgage: $89,851.64
SeanPavonePhoto
- Average mortgage amount (2022): $306,217
- Average APR (January 2022): 3.80%
- Average APR (April 2022): 5.21%
- Monthly payment with January APR: $1,426.83
- Monthly payment with April APR: $1,682.42
- Difference between payments with January APR and April APR: $255.58
- Extra amount paid each year: $3,067.02
- Extra amount paid over 30-year lifetime of mortgage: $92,010.59
DenisTangneyJr
- Average mortgage amount (2022): $298,441
- Average APR (January 2022): 3.78%
- Average APR (April 2022): 5.23%
- Monthly payment with January APR: $1,387.37
- Monthly payment with April APR: $1,645.22
- Difference between payments with January APR and April APR: $257.86
- Extra amount paid each year: $3,094.28
- Extra amount paid over 30-year lifetime of mortgage: $92,828.39
ibsky
- Average mortgage amount (2022): $314,565
- Average APR (January 2022): 3.73%
- Average APR (April 2022): 5.13%
- Monthly payment with January APR: $1,452.91
- Monthly payment with April APR: $1,714.08
- Difference between payments with January APR and April APR: $261.17
- Extra amount paid each year: $3,134.00
- Extra amount paid over 30-year lifetime of mortgage: $94,019.88
traveler1116
- Average mortgage amount (2022): $304,239
- Average APR (January 2022): 3.76%
- Average APR (April 2022): 5.21%
- Monthly payment with January APR: $1,411.39
- Monthly payment with April APR: $1,672.63
- Difference between payments with January APR and April APR: $261.24
- Extra amount paid each year: $3,134.91
- Extra amount paid over 30-year lifetime of mortgage: $94,047.19
” Darwin Brandis”
- Average mortgage amount (2022): $310,590
- Average APR (January 2022): 3.69%
- Average APR (April 2022): 5.12%
- Monthly payment with January APR: $1,427.08
- Monthly payment with April APR: $1,689.62
- Difference between payments with January APR and April APR: $262.54
- Extra amount paid each year: $3,150.46
- Extra amount paid over 30-year lifetime of mortgage: $94,513.95
danlogan
- Average mortgage amount (2022): $266,045
- Average APR (January 2022): 3.73%
- Average APR (April 2022): 5.39%
- Monthly payment with January APR: $1,229.37
- Monthly payment with April APR: $1,492.25
- Difference between payments with January APR and April APR: $262.88
- Extra amount paid each year: $3,154.54
- Extra amount paid over 30-year lifetime of mortgage: $94,636.23
DenisTangneyJr
- Average mortgage amount (2022): $316,939
- Average APR (January 2022): 3.82%
- Average APR (April 2022): 5.22%
- Monthly payment with January APR: $1,480.12
- Monthly payment with April APR: $1,743.61
- Difference between payments with January APR and April APR: $263.49
- Extra amount paid each year: $3,161.87
- Extra amount paid over 30-year lifetime of mortgage: $94,856.24
DenisTangneyJr
- Average mortgage amount (2022): $278,694
- Average APR (January 2022): 3.78%
- Average APR (April 2022): 5.38%
- Monthly payment with January APR: $1,295.89
- Monthly payment with April APR: $1,561.64
- Difference between payments with January APR and April APR: $265.75
- Extra amount paid each year: $3,189.02
- Extra amount paid over 30-year lifetime of mortgage: $95,670.50
DepositPhotos.com
- Average mortgage amount (2022): $303,884
- Average APR (January 2022): 3.76%
- Average APR (April 2022): 5.25%
- Monthly payment with January APR: $1,409.84
- Monthly payment with April APR: $1,677.61
- Difference between payments with January APR and April APR: $267.77
- Extra amount paid each year: $3,213.24
- Extra amount paid over 30-year lifetime of mortgage: $96,397.07
Elisa.rolle
- Average mortgage amount (2022): $317,575
- Average APR (January 2022): 3.58%
- Average APR (April 2022): 5.05%
- Monthly payment with January APR: $1,439.61
- Monthly payment with April APR: $1,715.15
- Difference between payments with January APR and April APR: $275.53
- Extra amount paid each year: $3,306.40
- Extra amount paid over 30-year lifetime of mortgage: $99,191.94
Chilkoot
- Average mortgage amount (2022): $339,422
- Average APR (January 2022): 3.85%
- Average APR (April 2022): 5.23%
- Monthly payment with January APR: $1,591.87
- Monthly payment with April APR: $1,870.03
- Difference between payments with January APR and April APR: $278.15
- Extra amount paid each year: $3,337.84
- Extra amount paid over 30-year lifetime of mortgage: $100,135.07
AlizadaStudios
- Average mortgage amount (2022): $313,336
- Average APR (January 2022): 3.60%
- Average APR (April 2022): 5.11%
- Monthly payment with January APR: $1,425.22
- Monthly payment with April APR: $1,704.10
- Difference between payments with January APR and April APR: $278.88
- Extra amount paid each year: $3,346.52
- Extra amount paid over 30-year lifetime of mortgage: $100,395.73
YinYang
- Average mortgage amount (2022): $342,355
- Average APR (January 2022): 3.77%
- Average APR (April 2022): 5.15%
- Monthly payment with January APR: $1,589.21
- Monthly payment with April APR: $1,869.97
- Difference between payments with January APR and April APR: $280.76
- Extra amount paid each year: $3,369.18
- Extra amount paid over 30-year lifetime of mortgage: $101,075.36
James_Lane
- Average mortgage amount (2022): $320,533
- Average APR (January 2022): 3.69%
- Average APR (April 2022): 5.18%
- Monthly payment with January APR: $1,474.23
- Monthly payment with April APR: $1,755.43
- Difference between payments with January APR and April APR: $281.20
- Extra amount paid each year: $3,374.37
- Extra amount paid over 30-year lifetime of mortgage: $101,231.17
mdgmorris
- Average mortgage amount (2022): $333,636
- Average APR (January 2022): 3.91%
- Average APR (April 2022): 5.32%
- Monthly payment with January APR: $1,575.85
- Monthly payment with April APR: $1,857.51
- Difference between payments with January APR and April APR: $281.66
- Extra amount paid each year: $3,379.97
- Extra amount paid over 30-year lifetime of mortgage: $101,399.08
wanderluster
- Average mortgage amount (2022): $319,046
- Average APR (January 2022): 3.76%
- Average APR (April 2022): 5.26%
- Monthly payment with January APR: $1,479.65
- Monthly payment with April APR: $1,763.58
- Difference between payments with January APR and April APR: $283.93
- Extra amount paid each year: $3,407.17
- Extra amount paid over 30-year lifetime of mortgage: $102,215.17
knowlesgallery
- Average mortgage amount (2022): $352,105
- Average APR (January 2022): 3.81%
- Average APR (April 2022): 5.18%
- Monthly payment with January APR: $1,643.45
- Monthly payment with April APR: $1,928.11
- Difference between payments with January APR and April APR: $284.66
- Extra amount paid each year: $3,415.93
- Extra amount paid over 30-year lifetime of mortgage: $102,477.90
DenisTangneyJr
- Average mortgage amount (2022): $427,901
- Average APR (January 2022): 3.73%
- Average APR (April 2022): 4.88%
- Monthly payment with January APR: $1,975.84
- Monthly payment with April APR: $2,265.36
- Difference between payments with January APR and April APR: $289.51
- Extra amount paid each year: $3,474.17
- Extra amount paid over 30-year lifetime of mortgage: $104,225.19
Art Wager
- Average mortgage amount (2022): $343,115
- Average APR (January 2022): 3.76%
- Average APR (April 2022): 5.20%
- Monthly payment with January APR: $1,591.31
- Monthly payment with April APR: $1,883.59
- Difference between payments with January APR and April APR: $292.28
- Extra amount paid each year: $3,507.37
- Extra amount paid over 30-year lifetime of mortgage: $105,221.22
HaizhanZheng
- Average mortgage amount (2022): $351,169
- Average APR (January 2022): 3.68%
- Average APR (April 2022): 5.17%
- Monthly payment with January APR: $1,612.77
- Monthly payment with April APR: $1,921.58
- Difference between payments with January APR and April APR: $308.81
- Extra amount paid each year: $3,705.72
- Extra amount paid over 30-year lifetime of mortgage: $111,171.46
Boogich
- Average mortgage amount (2022): $369,811
- Average APR (January 2022): 3.68%
- Average APR (April 2022): 5.16%
- Monthly payment with January APR: $1,697.64
- Monthly payment with April APR: $2,022.64
- Difference between payments with January APR and April APR: $325.00
- Extra amount paid each year: $3,900.02
- Extra amount paid over 30-year lifetime of mortgage: $117,000.56
” 4kodiak”
- Average mortgage amount (2022): $379,914
- Average APR (January 2022): 3.62%
- Average APR (April 2022): 5.08%
- Monthly payment with January APR: $1,732.05
- Monthly payment with April APR: $2,057.13
- Difference between payments with January APR and April APR: $325.08
- Extra amount paid each year: $3,900.98
- Extra amount paid over 30-year lifetime of mortgage: $117,029.28
aimintang
- Average mortgage amount (2022): $382,571
- Average APR (January 2022): 3.72%
- Average APR (April 2022): 5.18%
- Monthly payment with January APR: $1,764.78
- Monthly payment with April APR: $2,095.80
- Difference between payments with January APR and April APR: $331.01
- Extra amount paid each year: $3,972.17
- Extra amount paid over 30-year lifetime of mortgage: $119,164.99
Jacob Boomsma / istockphoto
- Average mortgage amount (2022): $407,532
- Average APR (January 2022): 3.69%
- Average APR (April 2022): 5.10%
- Monthly payment with January APR: $1,874.46
- Monthly payment with April APR: $2,211.69
- Difference between payments with January APR and April APR: $337.23
- Extra amount paid each year: $4,046.80
- Extra amount paid over 30-year lifetime of mortgage: $121,404.15
Rolf_52
- Average mortgage amount (2022): $447,400
- Average APR (January 2022): 3.76%
- Average APR (April 2022): 5.11%
- Monthly payment with January APR: $2,075.37
- Monthly payment with April APR: $2,432.76
- Difference between payments with January APR and April APR: $357.38
- Extra amount paid each year: $4,288.62
- Extra amount paid over 30-year lifetime of mortgage: $128,658.52
4nadia
- Average mortgage amount (2022): $493,578
- Average APR (January 2022): 3.70%
- Average APR (April 2022): 5.09%
- Monthly payment with January APR: $2,271.05
- Monthly payment with April APR: $2,677.83
- Difference between payments with January APR and April APR: $406.78
- Extra amount paid each year: $4,881.36
- Extra amount paid over 30-year lifetime of mortgage: $146,440.82
mlauffen
Though mortgage APRs have already significantly increased since the start of the year, they may rise even further by 2023. This is especially true given that the Federal Reserve is poised to raise the Fed funds rate multiple times this year, which will likely put even more upward pressure on mortgage rates.
While rising rates won’t hurt most borrowers who currently have a fixed-rate mortgage and aren’t planning on selling, they could impact those who haven’t yet bought a home. For example, if APRs were to rise by another 50 basis points by year’s end, monthly mortgage payments across the country would increase by an average of $93.99, even if loan amounts stayed the same. This extra cost could make it even more difficult for some would-be homebuyers to navigate what will probably remain a pricey housing market.
Of course, there’s no guarantee that rates will rise that high by the time 2023 arrives. And even if they did, it wouldn’t necessarily be all bad news. After all, higher rates should result in less demand from homebuyers, which could, if nothing else, mean that those who decide to buy won’t be as likely to deal with hassles like incredibly tough home price negotiations and extremely limited housing inventory.
Regardless of what the future holds, it’s clear that rising rates have already made buying a home more expensive. Fortunately, that doesn’t mean homebuying is an impossible feat, and with proper planning, purchasing a house could still be a great option for many people.
fizkes / iStock
Though rates are quickly rising, there are still a few ways for borrowers to potentially get a lower APR on their mortgage. Here are three tips on how to do just that:
- Shop around for a mortgage before buying. Because different lenders will often offer different rates to the same borrowers, homebuyers can potentially secure a lower rate by shopping around for a mortgage before buying a house. In some instances, a borrower may be able to receive a rate that is dozens of basis points lower than what the first lender they saw offered them. This lower rate could result in tens of thousands of dollars in savings over the lifetime of a loan.
- Work on your credit. Because it’s used to gauge how likely a person is to repay their debt, a credit score is an important factor that lenders consider when determining what rate to offer a prospective homebuyer. Because of this, borrowers should work on making their credit score as good as possible before they apply for a mortgage. Not only can a higher score help a homebuyer get a lower rate, but it can also help them get approved for a loan in the first place.
- Consider a mortgage with a shorter term. Shorter-term loans often come with lower rates than their long-term counterparts. For example, borrowers with excellent credit can typically expect to receive a rate on a 15-year, fixed-rate mortgage that’s more than 50 basis points lower than what they can expect to receive on a 30-year, fixed mortgage. Though a shorter loan term will typically result in higher monthly payments, it will nonetheless result in less interest paid over the lifetime of a loan. This can be worth it for those who have extra cash and don’t mind a steeper housing payment.
DepositPhotos.com
Data in this study was generated from more than 570,000 users who received an offer for a 30-year, fixed-rate mortgage on the LendingTree platform from Jan. 1, 2022, through April 22, 2022.
To calculate monthly mortgage payments, LendingTree used the average mortgage amounts offered to users in each state in 2022 (through April 22), the average APRs offered to users in each state in January 2022 and the average APRs offered to users in each state in April 2022 (through the 22nd).
Monthly payment differences were found by subtracting a calculated monthly payment with an average APR for January from a calculated monthly payment with an average APR for April. To determine how much this difference would add up to yearly, the monthly difference was multiplied by 12. This yearly difference was then multiplied by 30 to determine how much more expensive a mortgage would be over its lifetime.
This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.
monkeybusinessimages/istockphoto
Deposit Photos
Featured Image Credit: Prostock-Studio / iStock.
