It’s simple, the higher the interest rate the higher the payment. That is why it is important to look at where rates are headed when deciding to buy now or wait.
Depending on the amount of the loan that you secure, even a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly. The chart below shows what 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 at or about $1,100 a month.
As rates rise, home buyers will have to deal with higher financing costs and monthly payments. For many potential buyers this will mean buying a smaller home or dealing with very tight budgets and giving up many luxuries they enjoy today.
According to FreddieMac Mortgage Rates Survey rates remain very low- in spite of the recent rate hike. But even the smallest increases can effect your buying power – so if you’re waiting for a better time to buy a home- the time may be better than now.
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