Home › Forums › Housing › Which is preferable: lower interest rates or lower prices? › It depends. For a $100K
It depends.
For a $100K mortgage @ 6.0% (30 yr fixed, fully amortized), the payment (P&I) is abt $600.
For a $100K mortgage @ 7.0% (30 yr fixed, fully amortized), the payment (P&I) is abt $665.
To offset the difference in payment for an increase of 1.0% on the same loan, the loan amount would need to be reduced to roughly $90,250.
In other words, a 1.0% APR increase would necessitate abt a 10% reduction in the loan amount, to achieve the same payment (P&I only).
Obviously the above is very simplistic, and there are a myriad of variables that make every situation unique. Hope this gives a bit of clarity.
