Thinking of buying a home? Don’t wait!
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search. Read on How interest rates increases affect buying a home?
How Will This Impact Your Mortgage Payment?
According to Freddie Mac’s Primary Mortgage Market Survey, interest rates for a 30-year fxed rate mortgage have increased by half of a percentage point, to around 4.5%, in 2018. This is still significantly lower than recent history.
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power. Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.
The chart shows the impact rising interest rates would have if you planned to purchase a home within the national median price
range, and planned to keep your principal and interest payments under $2,000 a month. With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000).
You might be interested: Buying a Home Within Your Comfort Zone
Bottom Line
Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream home.
Swee Ng, Realtor and Phoenix East Valley resident specializing in win-win real estate transaction through great communication and fighting for his clients’ best interest. After all, this is more than real estates, this is about your life and your dreams.
If you are looking to buy or sell your home in Phoenix AZ area, we hope you will consider us. Contact us today for complimentary consultation.
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