Anyone looking to purchase a home has plenty of numbers to consider.
How many bedrooms and bathrooms? How much square footage? What year was it built? And wait, what time did the realtor say we’re meeting?
Buying a home is the biggest purchase most people will ever make. Among the most important numbers to understand throughout the process is the interest rate available on your mortgage, and how it will fit into your budget alongside your other financial goals.
VyStar’s financial calculators can help you plan ahead, so you can feel confident about your next step.
How are interest rates determined?
When it comes to borrowing for a home, the interest rate on your mortgage can significantly affect how much you’ll pay both month to month and over the life of the loan. But where do these rates come from?
Mortgage interest rates are shaped by two main influences: the economy and your personal financial profile.
On a national level, the Federal Reserve sets a target for the federal funds rate, which is the rate financial institutions charge one another for short-term loans. This influences interest rates across the lending industry. Rates often rise when inflation is high or the economy is growing rapidly and fall when economic growth slows or stability is needed.
On a personal level, lenders determine your individual rate based on factors such as:
Credit score: The higher your credit score, the more likely you are to qualify for a lower interest rate.
Down payment: A larger down payment reduces the lender’s risk and could help secure a better rate.
Loan type and term: Whether you choose a fixed-rate or adjustable-rate mortgage, and whether the loan term is 15, 20 or 30 years, will affect your rate.
Even a small difference in interest rates can add up to thousands of dollars over the lifetime of a loan. That’s why it’s important to understand how rates affect your budget and to plan carefully.
How to use VyStar’s Mortgage Payment Calculator
VyStar’s mortgage payment calculator is designed to make this process easier. By adjusting a few key numbers, you can get a clear idea of what your monthly mortgage payment could look like — and how changes in the interest rate or down payment might affect your budget.
The calculator has four main numbers to input: home price, down payment amount, loan term and interest rate. From there, you can enter additional information to further customize your experience and better understand what to expect. The result is the monthly mortgage payment you can plan for.
Here’s an example:
1. Home price: Say you’re interested in a home in the Mandarin area of Jacksonville. It checks many of your boxes — three bedrooms, an open floor plan and a big front yard — and the listing price is $365,000. Enter $365,000 in the home price field.
2. Down payment: Consider your personal finances and how much you can put down. If you’re selling your current home, you may have additional funds. In this scenario, let’s say you’re able to put down 20%, which is $73,000. Enter $73,000 in the down payment field.
3. Loan term: The most common mortgage term is 30 years, but terms of 10, 15 and 20 years are also options. In this example, we’ll select 30 years.
4. Interest rate: Enter the interest rate you expect to pay or use this field to experiment with different rates to see how even a small change can affect your monthly payment. For this example, we’ll input 6.50%.
You can also enter additional details like property taxes, homeowners insurance and homeowners association dues for a more precise estimate. For now, we’ll leave those fields pre-populated.
Using these figures, the estimated monthly mortgage payment would be $2,413.
Get started today
Homeownership is an exciting and rewarding milestone, but it’s also a major financial decision. Having the right tools can help make the process smoother. VyStar’s financial calculators are designed to give you the insights you need, whether you're exploring homes for the first time or preparing to refinance your current mortgage.
It is important to know that getting a preapproval improves your buying power and lets you know how much home you can afford. Plus, sellers are more likely to accept your offer if you are already preapproved. Visit our preapproval page to learn more. Also, VyStar also offers resources such as a Mortgage Application Checklist so you can understand what you will need to complete your application.
Take the guesswork out of your homebuying journey by exploring the mortgage options at VyStar and speaking with a Mortgage Loan Officer today.