A recent survey commissioned by Bankrate demonstrates that a solid number of people have moved past the problems seen in the housing market in 2007. However, survey results also indicate that many individuals are not aware of how much interest rates affect their housing costs. Over a quarter of respondents said that mortgage rates would need to hit 10 percent or higher for them to choose to rent instead of buy a home, and another nine percent said that they would still buy with rates at eight or nine percent.
Mortgage rates can have a dramatic impact on just how much people pay for their homes, both in terms of their monthly mortgage payment and the total cost of their home over the course of their loan. Bankrate points out that the monthly payments on a $240,000 home and a $130,000 home are the same if the more expensive home has a four percent interest rate and the less expensive one has a 10 percent interest rate.
Another issue is that 35 percent of those surveyed said that they weren’t sure what their mortgage rate was. According to an assistant professor of economics at Rutgers University, many individuals just look at what their monthly payments are without considering their rate. Not knowing what someone’s mortgage rate is coupled with a lack of awareness about how they effect housing costs can lead people to missing opportunities to reduce their mortgage payments. Although rates are fairly low right now, many people still have higher rates because they are not aware of what they are.