Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $195,000 home if you put 20% down and financed the remaining with a 30-year mortgage at 6% interest compared to a 30-year mortgage at interest?
figure the cost for each, subtracting the original principal of 195K
compare.
To calculate the difference in interest payments between a 30-year mortgage at 6% interest and a 30-year mortgage at another interest rate, we need to know the specific interest rate you want to compare it with.
However, I can provide you with the general steps to calculate the difference in interest payments:
1. Determine the loan amount: Subtract the down payment from the home price. In this case, if you put 20% down on a $195,000 home, the loan amount would be $195,000 - (20% x $195,000) = $156,000.
2. Calculate the monthly mortgage payment: Use an online mortgage calculator or a financial calculator to determine the monthly mortgage payment for a 30-year mortgage at 6% interest and another interest rate you want to compare it with. Make sure to include any additional costs like property taxes and insurance, if applicable.
3. Determine the total interest paid: Multiply the monthly mortgage payment by the number of months in the loan term (30 years x 12 months = 360 months) to find the total amount paid through monthly payments. Then, subtract the loan amount from the total amount paid to determine the total interest paid over the life of the loan.
4. Compare the two scenarios: Repeat steps 2 and 3 for the second interest rate. Subtract the total interest paid for the 30-year mortgage at the lower interest rate from the total interest paid for the 30-year mortgage at 6% interest to find the difference in interest payments.
Keep in mind that the higher the interest rate, the more interest you will pay over the life of the mortgage. It's also important to note that mortgage rates can vary depending on various factors like your credit score, loan term, and market conditions.