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How much will a $600,000 mortgage cost monthly after rates are cut?
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The housing market landscape has been challenging for buyers to navigate over the past few years. After all, a perfect storm of high mortgage rates, limited home inventory and elevated home prices has created significant barriers to entry for those looking to purchase a home. With homebuying costs elevated, many potential buyers have been temporarily priced out of the market, leaving them wondering when, if ever, they might be able to achieve their dream of homeownership.
But while the housing market hasn’t been friendly to buyers recently, there are signs that the tide may be turning. In particular, there are economic indicators suggesting relief from high rates could be on the horizon. Not only has inflation cooled to just above the Federal Reserve’s 2% target rate, but the job market is slowing down, too. In response to these developments, the Federal Reserve is finally expected to start implementing rate cuts, with the first one expected at the upcoming Fed meeting that concludes on September 18.
These economic shifts also make it more likely that the Fed will implement more rate cuts in the coming months. Such a move would likely have a significant impact on mortgage rates, potentially opening up new opportunities for homebuyers who have been sidelined by high borrowing costs. With this in mind, it’s helpful to understand how the upcoming rate cuts could affect the cost of a typical mortgage loan, such as one for $600,000.
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How much will a $600,000 mortgage cost monthly after rates are cut?
To understand the potential impact of rate cuts on mortgage costs, let’s first look at what a $600,000 mortgage would cost at today’s average mortgage rates, which are 6.41% for 30-year fixed mortgage loans and 5.78% for 15-year fixed mortgage loans (as of September 13, 2024).
These figures represent the monthly payments for principal and interest only, assuming a 20% down payment (of $120,000) has been made. It’s important to note that actual monthly payments would be higher when factoring in property taxes and homeowners insurance, which vary by location and other factors.
- 15-year mortgage at 5.78%: $3,993.68 per month
- 30-year mortgage at 6.41%: $3,005.57 per month
If the Federal Reserve implements a 0.25% rate cut at its upcoming meeting, and assuming mortgage rates follow suit and drop by the same 25 basis points (though there isn’t always a direct correlation), here’s how the monthly payments might change:
- 15-year mortgage at 5.53%: $3,929.65 per month
- 30-year mortgage at 6.16%: $2,927.40 per month
In this scenario, borrowers could save approximately $64 per month on a 15-year mortgage or about $78 per month on a 30-year mortgage.
If the Fed were to implement multiple rate cuts totaling 0.50% over the coming months, and mortgage rates were to fall by same 50 basis points, the potential savings become even more substantial:
- 15-year mortgage at 5.28%: $3,866.19 per month
- 30-year mortgage at 5.91%: $2,850.13 per month
With a half-point reduction in rates, borrowers could see monthly savings of about $132 on a 15-year mortgage or about $155 on a 30-year mortgage compared to current rates.
It’s worth noting that these calculations are based on the assumption that mortgage rates will move in tandem with Fed rate cuts. In reality, the relationship between Fed rates and mortgage rates is more complex, and other factors can influence mortgage rates as well.
Find out how affordable the right mortgage loan could be now.
Should you wait for rates to drop to buy a home?
The prospect of lower mortgage rates can be appealing, but the decision to wait for rates to drop before buying a home isn’t always straightforward. There are several factors to consider, including:
- Monthly payments: If you’re currently stretching your budget to afford a home at today’s mortgage rates, waiting for a rate cut could make homeownership more affordable and sustainable for you in the long run.
- Buying power: Lower rates mean you might be able to afford a more expensive home while keeping your monthly payments the same, potentially opening up more options in your desired neighborhoods.
- Competition: Lower rates typically bring more buyers to the market. This increased demand could lead to more competition for available homes, potentially resulting in bidding wars.
- Home price appreciation: As more buyers enter the market due to lower rates, home prices could rise. The money you save on interest might be offset by having to pay a higher purchase price for your desired home.
- Timing: While rate cuts are expected, their exact timing and magnitude are not guaranteed. Waiting for the perfect rate could mean missing out on good opportunities in the meantime.
- Opportunity cost: If you’re currently renting, every month you wait is another month of paying rent instead of building equity in a home.
The bottom line
Waiting until rates drop to buy a home could lead to savings of between $64 and $155 per month on a $600,000 mortgage (depending on the loan term and other factors). While the monthly savings can add up over time, the decision to buy now or wait for lower rates depends on your circumstances. If you find a home and can comfortably afford the payments at current rates, it might make sense to move forward rather than risk losing the opportunity. On the other hand, if a small reduction in rates would make a significant difference in your ability to afford a home, waiting could be the prudent choice.
The mother of the embattled hip-hop mogul Sean “Diddy” Combs released a statement Sunday defending her son against the criminal charges and multiple allegations of sexual misconduct he is currently facing while in federal custody in New York.
Combs, 54, has been detained at the Metropolitan Detention Center in Brooklyn since pleading not guilty on Sept. 17 to federal charges of sex trafficking, racketeering conspiracy and transportation to engage in prostitution.
In a statement released through her lawyers, Janice Smalls Combs says it has been “unbearable” to witness “what seems to be like a public lynching of my son before he has had the opportunity to prove his innocence.”
She then mentions that her son “has made mistakes in his past” and refers to an episode caught on security video that appeared to show Combs attacking singer Cassie, his former girlfriend, in a Los Angeles hotel hallway in 2016. In May, Combs apologized for the incident, saying his behavior was “inexcusable” and that he took “full responsibility” for his actions.
In November, Cassie, whose legal name is Casandra Ventura, filed a lawsuit accusing Combs of rape and abuse during their relationship; he denied the accusations. They reached a settlement the following day.
The indictment against Combs refers to the incident caught by the hotel security cameras. According to the indictment, Combs attempted to bribe a hotel security staff member who intervened in the incident to keep them quiet.
“My son may not have been entirely truthful about certain things, such as denying he has ever gotten violent with an ex-girlfriend when the hotel’s surveillance showed otherwise,” Janice Smalls Combs says in the statement. “Sometimes, the truth and a lie become so closely intertwined that it becomes terrifying to admit one part of the story, especially when that truth is outside the norm or is too complicated to be believed. This is why I believe my son’s civil legal team opted to settle the ex-girlfriend’s lawsuit instead of contesting it until the end, resulting in a ricochet effect as the federal government used this decision against my son by interpreting it as an admission of guilt.”
She adds that it has been “agonizing” to see people joke about her son’s situation “over lies and misconceptions.”
At the end of the statement, she asks fans and the public “to not judge him before you’ve had the chance to hear his side.”
“My son is not the monster they have painted him to be,” she says. “I can only pray that I am alive to see him speak his truth and be vindicated.”
In the indictment, prosecutors allege that since 2008 Combs has been part of a criminal organization that engaged in or attempted to engage in sex trafficking, forced labor, kidnapping, arson, bribery, obstruction of justice and other offenses.
Prosecutors accused Combs of using his business empire as a criminal enterprise to conceal his alleged abuse of women at events Combs referred to as “Freak Offs.”
“The ‘Freak Offs’ sometimes lasted days at a time, involved multiple commercial sex workers and often involved a variety of narcotics, such as ketamine, ecstasy and GHB, which Combs distributed to the victims to keep them obedient and compliant,” U.S. Attorney Damian Williams, of the Southern District of New York, told reporters when the indictment was unsealed.
On Oct. 1, Texas attorney Tony Buzbee said he was representing 120 accusers who have come forward with new sexual misconduct allegations against Combs. Buzbee said he expects lawsuits to be filed within the next month. Buzbee described the victims as 60 males and 60 females, and that 25 were minors at the time of the alleged misconduct.
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After days of uncertainty, the Federal Aviation Administration announced Sunday that SpaceX had been cleared to press ahead with the planned Monday launch of the European Space Agency’s $398 million Hera asteroid probe, stormy weather permitting.
With forecasters calling for an 85% chance of thick clouds and showers that would trigger a delay, Hera’s launch atop a Falcon 9 rocket from pad 40 at the Cape Canaveral Space Force Station is targeted for 10:52 a.m. EDT Monday. The forecast is 75% “no-go” if launch is delayed to Tuesday.
“The last hurdle is the weather. So, please, please, I need you to do something about it!” Hera project manager Ian Carnelli joked with reporters Sunday. “It’s the only thing I really cannot control. … It looks like we have some opening around the time of launch, but it’s really impossible to say at the moment.”
ESA
Hurricane Milton, meanwhile, poses threats throughout the week as the cyclone is expected to cross the Florida peninsula Wednesday and move out over the Atlantic Ocean near Florida’s Space Coast.
Launch of NASA’s $5.2 billion Europa Clipper mission, which had been planned for Thursday from the Kennedy Space Center, has been put on hold pending passage of the storm.
“The safety of launch team personnel is our highest priority, and all precautions will be taken to protect the Europa Clipper spacecraft,” said Tim Dunn, a senior launch director with NASA’s Launch Services Program.
“Once we have the ‘all-clear’ followed by facility assessment and any recovery actions, we will determine the next launch opportunity.”
Likewise, the return to Earth of three astronauts and a Russian cosmonaut aboard a SpaceX Crew Dragon ferry ship has been delayed by predicted bad weather.
Crew 8 commander Matthew Dominick, Mike Barratt, Jeanette Epps and cosmonaut Alexander Grebenkin, launched to the International Space Station last March. They had planned to undock Monday, returning to Earth to close out a 217-day mission.
National Weather Service
But NASA announced Sunday their departure would be delayed to at least Thursday because of expected bad weather. Crew Dragon ferry ships require calm winds and seas in the Gulf of Mexico or the Atlantic Ocean to permit a safe splashdown.
As for the Falcon 9, the FAA clearance only applied to the Hera launch while the agency continues overseeing an investigation into what caused a Falcon 9 second stage to malfunction Sept. 28 and miss its targeted re-entry point into Earth’s atmosphere over the Pacific Ocean.
SpaceX routinely sends spent second stages into the atmosphere for destructive breakups at the end of their missions to prevent possible collisions or other problems that might add to the space debris already in low-Earth orbit.
The FAA wants to make sure the problem is understood and corrected so future re-entries are carried out as planned, ensuring any debris that survives re-entry heating will splash down harmlessly in targeted ocean impact “footprints,” well away from shipping lanes and populated areas.
The second stage being used for the Hera mission will boost the space probe into deep space, using all of its propellant in the process. It will not return to Earth, so a malfunction, should one occur, would pose no safety threat.
“The FAA has determined that the absence of a second stage reentry for this mission adequately mitigates the primary risk to the public in the event of a reoccurrance of the mishap experienced with the Crew-9 mission,” the agency said in a statement, referring to the most recent Falcon 9 flight.
NASA
“Safety will drive the timeline for the FAA to complete its review of SpaceX’s Crew-9 mishap investigation report and when the agency will authorize Falcon 9 to return to regular operations,” the statement concluded.
The FAA did not address plans to launch the Europa Clipper atop a Falcon Heavy rocket Thursday for its long-awaited mission to Jupiter and its ice-covered moon Europa.
Like the Hera mission, the Clipper’s upper stage, the same one used for all Falcon-family rockets, will not return to Earth. Instead, it will burn all of its propellants to accelerate the probe to an Earth-escape velocity of 25,000 mph.
But FAA clearance to proceed, assuming it comes in time, likely will be a moot point, at least in the near term. It is unlikely the Clipper and its Falcon Heavy rocket will be moved to the Kennedy Space Center launch pad until after Milton has passed through the area.
