There’s a reason most everyone in real estate has their eyes peeled on how the mortgage rate moves every week. Even a slight rise can short-circuit some buyers. The average rate on a 30-year fixed mortgage reached 6.71% in early September, its highest level in 13 months, according to Freddie Mac. A separate daily measure placed the average close to 7%.
On a $350,000, 30-year mortgage, the monthly principal-and-interest payment is approximately $2,155 at 6.25%. At 7%, it rises to roughly $2,329, a difference of $174 a month.
Over the first five years, the borrower with the 7% loan would pay approximately $13,200 more in interest. They would also have paid down about $2,780 less principal. These calculations exclude property taxes, insurance, mortgage insurance, association fees and closing costs.
“Buyers see the extra $174 and immediately multiply it by 12,” says Nick Nastos, real estate broker and founder of Chicago’s Property Shop. “That tells them what the rate costs this year, but many people expect to stay in a home much longer than that. The five-year comparison shows how much interest they will pay and how slowly the loan balance will fall.”
Nastos, who worked in mortgage lending and foreclosure collection before moving into residential sales, recommends recalculating six figures before changing a home-buying plan. They are:
- The complete monthly payment. Compare principal and interest alongside realistic taxes, homeowners insurance, mortgage insurance and HOA fees.
- The five-year loan cost. Estimate total interest and remaining principal after 60 payments, not simply the first month’s increase.
- Cash left after closing. A technically affordable payment can still be risky if the down payment and closing costs empty the buyer’s savings.
- First-year maintenance. Buyers should identify aging roofs, heating and cooling systems, appliances and other expenses that may arrive soon after closing.
- The cost of continuing to rent. Waiting has its own price, including rent, possible annual increases, moving expenses and the equity a buyer will not build.
- Available seller credits. In markets where buyers have leverage, a seller may contribute toward closing costs or a rate buydown. Buyers should compare that option with a price reduction rather than assuming the lower price produces the greater savings.
“The rate should never be treated as a yes-or-no answer,” Nastos says. “I would be more concerned about a buyer closing with no emergency fund than one accepting a slightly higher rate with a manageable payment and cash still in the bank.”
Mortgage quotes can also vary considerably between lenders. A 2026 analysis of 3.2 million mortgage originations found that the typical borrower could overpay by $3,363 annually by failing to secure a more competitive loan.
“Buyers cannot control the bond market, but they can compare lenders, negotiate credits and choose a home that does not consume every available dollar,” Nastos adds. “Those decisions may matter more over five years than trying to predict the perfect week to lock a rate.”
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Calculations assume a $350,000, 30-year fixed-rate mortgage held for 60 months, with no refinancing or additional principal payments. Figures are rounded and cover principal and interest only.
