A buyer who purchases the median-priced home today with 20% down will pay $413,700 in interest over a 30-year mortgage at the current 6.53% rate, according to a data report from Best Interest Financial and Clever Real Estate.
However, that sum is $10,500 more than the home itself costs. As a result, today’s buyers will pay 102.6% of the home’s price again in interest.
Choosing a 15-year mortgage at today’s 5.87% rate would save $250,378 over a 30-year loan. However, it also raises the monthly payment by $654.
Still, things could become even pricier if today’s rate climbed a single percentage point to 7.53%. If that occurred, the typical buyer would pay $78,066 more in lifetime interest. Putting down the FHA minimum of 3.5% instead of 20% doesn’t help – that adds an extra $85,326 over the life of the loan.
And if you really want to be depressed, consider the difference that five years made in the housing market. At 2021’s average rate of 2.96%, today’s median home would cost $692 less a month, $8,306 less a year, or $249,188 less in interest over the life of the loan.
Some markets have greater interest burdens than others. California claims five of the six most interest-burdened metros, led by San Jose at $1.7 million, while Ohio is home to four of the 10 metros where buyers pay the least in lifetime interest, most notably Toledo at $163,654.
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