When buying a home, the potential monthly payment isn’t all you should think about — especially on a loan as big as $450,000. On mortgages of this size, interest costs can be significant, both monthly and over the long haul, so you’ll want to be well aware of these expenses before making your move.
If you’re planning to take out a $450,000 mortgage, use this guide to understand what costs you can expect to pay over the life of the loan.
Monthly payments for a $450,000 mortgage
With a $450,000 mortgage and an APR of 6%, you’d pay $3,797.36 per month for a 15-year loan and $2,697.98 for a 30-year loan. Keep in mind that these amounts only include principal and interest. In many cases, your monthly payment will also include other expenses, too.
Here’s a breakdown of what a typical mortgage payment includes:
- Principal: This goes straight toward your loan’s balance. You only pay a small amount toward your principal at the beginning of your loan and more as you get toward the end of your term.
- Interest: This is the cost of borrowing the money and is usually the biggest share of your payment at the start of your loan.
- Escrow: Many lenders will have you put money toward escrow each month, too. This is a type of account used to store funds for future property tax and home insurance bills.
Here’s a quick look at what the monthly principal and interest payment would be for a $450,000 mortgage with varying rates:
Annual Percentage Rate (APR) | ||
---|---|---|
6.00% | ||
6.25% | ||
6.50% | ||
6.75% | ||
7.00% | ||
7.25% | ||
7.50% | ||
7.75% | ||
8.00% |
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Where to get a $450,000 mortgage
Since interest on a $450,000 home loan can be significant, you’ll want to shop around before taking out your mortgage. This can allow you to get the lowest interest rate possible and reduce your costs.
With Credible, you can compare lender options in just a few minutes — saving you a whole lot of time and effort.
What to consider before applying for a $450,000 mortgage
Knowing the total costs of the loan is critical before taking out a mortgage of this size. You should also understand what your closing costs will be (your lender can help you estimate these) and how much you’ll need for a down payment. Conventional loans require at least 3% down.
Total interest paid on a $450,000 mortgage
The exact amount of interest you’ll pay on a $450,000 loan will depend on your rate and your loan’s terms (how long the loan lasts). A shorter term will typically offer fewer interest costs than a loan with a longer term.
Example: A 30-year, $450,000 mortgage with an APR of 6% would mean paying a total of $521,271.85 in interest over the course of your loan.
A 15-year mortgage with the same terms would come with $233,524.03 in interest costs — around $287,747 less.
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Amortization schedule on a $450,000 mortgage
You can use an amortization schedule to understand the principal and interest costs for each year of your loan, as well as the mortgage’s costs over the long haul.
As you can see in the examples below, your monthly payments largely go toward interest in the first few years of your loan. As you get closer to the end of your loan term, you’ll pay more toward the actual balance.
Here’s what an amortization schedule for a 30-year, $450,000 loan with a 6% APR looks like:
And here’s one for a 15-year, $450,000 mortgage with a 6% APR:
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How to get a $450,000 mortgage
If you’ve considered the costs and think you’re ready to proceed with your $450,000 loan, the process is pretty simple.
When completing your mortgage application, it's important to have certain financial details ready, including your income, estimated credit score, homebuying budget, and information about your assets and savings.
Follow these steps and you’ll be a proud homeowner in no time:
- Estimate your homebuying budget. Before you can buy a house, you first need to determine what you can comfortably afford. You’ll need a clear picture of your monthly income, as well as the taxes, maintenance costs, HOA dues, and other costs of homeownership. Use our mortgage calculator to help guide you.
- Pull your credit report. Your credit is going to heavily influence both your ability to get a mortgage and the interest rate you get if you do. Pull your report and make sure there aren’t any negative marks (late payments, accounts in collections, etc.). If there are, you’ll need to settle these before applying for your loan.
- Get pre-approved for your loan. Getting pre-approved for your loan can give you a good idea of how much you’ll be eligible to borrow, as well as what price range you should be shopping in. A pre-approval can also give you a leg up in a competitive market. You should always seek approval from at least a few lenders to ensure you’re getting the best deal.
- Compare loan offers. Once you’ve gotten pre-approved by several lenders, you should compare your loan offers on interest rate, APR, points, closing costs, fees, and more. There’s also a spot on the third page of your loan estimate that tells you your total costs for the loan in five years. This can help you compare offers as well.
- Find a home and put in your bid. Next, you’ll need to find that dream home and put in your offer. If the seller accepts, you can move on to the full mortgage application.
- Fill out your mortgage application. Fill out your chosen lender’s official mortgage application, along with any required documentation. This might include your two most recent tax returns and W-2s, recent bank statements, pay stubs, and more.
- Wait for loan approval. Next, your loan will move into the underwriting phase, which is when the lender verifies the details on your application and works to ensure you can repay the loan. Eventually, you’ll get the all-clear, and you’ll be scheduled for a closing date.
- Get ready for closing. Once you have a closing date on the books, get your down payment and closing costs ready, and review your final closing disclosures. If you have questions, ask your loan officer. You should also secure a home insurance policy, as your lender will require this before finalizing your loan.
- Close on your loan. Finally, you’ll attend your closing appointment. This is when you’ll sign your paperwork, hand over your down payment and closing costs, and get your keys.
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