If you’re eager to buy a new home, now may not be the time to make the biggest purchase of your life.
That’s because the average interest rate has spiked to 4.61%, according to The Wall Street Journal. That’s up from 3.99% in January and the highest average since 2011.
Of course, a higher interest rate could translate to paying a few hundred dollars extra every month and thousands more added to the total cost of your home over the 30-year span of your mortgage.
For example, if you bought a $200,000 home back in January at the 3.99% interest rate, your monthly payment would be $954. If you bought the same house today at 4.61% interest, your monthly payment would jump to $1,026.
That $72 may sound insignificant if you’ve got the flexible income to cover it each month. But over the life of your 30-year mortgage, the 4.61% interest rate will mean paying $25,920 more for the same house.
Whether you’re a first-time buyer or looking to move from your starter house to a bigger home, you’re going to have to do some pretty important math before you take the leap.
One of our Penny Hoarding freelance writers, Steve Gillman, has already shown how a few quick calculations can make easy work of the rent vs. own debate. In fact, Gillman and his wife saved more than $5,000 a year by renting a small home instead of buying at the top of the market back in 2006.
Gillman even put together a checklist to calculate the costs of a new home to help you decide if you should buy or keep renting.
According to Gillman — he’s been a homeowner six times over as of 2016, so we trust his judgment — you should be able to say yes to all these points.
Check out Gillman’s story to learn even more if you still can’t decide if you should buy or stay put.
Desiree Stennett (@desi_stennett) is a staff writer at Codetic.