6% vs 6.5% Mortgage Rate
If you’re waiting for rates to drop under 6% let’s take a look at the difference a 0.5% mortgage-rate drop makes on a $600,000 home. If you’re waiting for rates to change, you should be able to run the numbers.
Let’s assume a couple of things:
We’ll figure principle and interest only – excluding fees, utilities, and taxes
You’ve got 20% down payment – that will make $600k sales price a $480k mortgage
Let’s look at the monthly cost difference for a conventional 30-year @ 6% and 6.5% For the sake of clarity we’ll ignore costs like taxes and fees and just stick to principle and interest.
Source: www.bankrate.com
Here’s a simple / helpful mental shortcut you can use when you’re figuring on the fly:
Every 0.5% in rate ≈ $30–$35 per $100k borrowed.
So for $600k borrowed: $30 × 6 ≈ $180/month, which lands almost exactly where the math came out. For $580k borrowed: $30 x 5.8 ≈ $174/month
Now here’s a twist: If you’re waiting for rates to drop that half-percent AND you’re in a appreciating market, then you really need to factor in the loss in equity by waiting and saving $ on the monthly payment. Let’s look at it.
