Lower Mortgage Rate or Lower Home Price?

With 35% down, 30-year amortization and assumed rates of 2.5% and 4.2% held constant for 20 years, the lower-price scenario incurs about $194,000 more interest, but purchase price plus 20-year interest is about $277,000 lower.

This result applies only to these assumptions, not all higher-rate purchases. The rates are illustrative, not the buyers’ contracts or guaranteed for 20 years. Renewal rates can change the result. Principal still owing after 20 years is already included in purchase price. Other costs, returns on the down-payment difference and future property values are excluded; this is not actual profit or loss.

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