Buying a Home? Here’s How Much You Can Save Compared With Last Year

What a difference a few months make for today’s home shoppers.

Those looking for a home at the beginning of January 2024 were likely to have significantly lower monthly mortgage payments than someone who bought a home last fall, according to a new Realtor.com analysis.

As recently as late October, mortgage rates were hovering around 7.8%, according to Freddie Mac data. That meant a buyer who took out a 30-year fixed-rate home loan on a median-priced U.S. home — which stood at $424,000 that month — and who also made a down payment of 10% would have had a monthly payment of $2,751, Realtor.com says.

However, both mortgage rates and home prices have come down since the fall. Realtor.com says that as of Feb. 1, mortgage rates had declined to 6.63%. In addition, the median price of a home in the U.S. had fallen to $414,000.

The upshot: Someone buying a home in early February and making a 10% down payment could expect to have a monthly mortgage payment of $2,385.

That means February homebuyers lowered their monthly payment by $366 compared with what they would have paid in October. Waiting a few months to make a purchase potentially saved them nearly $4,400 a year in mortgage payments.

Add in property taxes and the cost of private mortgage insurance, and the savings of February homebuyers compared with their counterparts in October rises to $4,584 a year — or a whopping $137,520 over the life of a 30-year mortgage.

As Realtor.com concludes:

“It’s astonishing what a difference seemingly incremental changes in interest rates can make.”

If mortgage rates continue to fall, home shopper savings will increase. According to Realtor.com:

• A dip of 0.5% (to about 6.1%) would drop the monthly payment on a median-priced home to $2,263.
• A dip of 1% (to about 5.6%) would drop the monthly payment to $2,144.