It’s amazing to see what interest rates can do to your purchasing power. In fact, the forecasted increase in rates this year could take a $40,000 bite out of yours if you are looking at $400,000 home.
Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices have recovered quite a bit BUT interest rates have stayed near historic low.
Sellers should realize that waiting to make the move when mortgage rates are projected to increase probably doesn’t make sense. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain budget for your monthly housing costs.
Here is a chart detailing this point:
According to Freddie Mac, the current 30-year fixed rate is currently around 3.75%.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, by $10,000).
Freddie Mac predicts that mortgage rates will be closer to 4.7% by this time next year.
Act now to get the most house for your hard-earned money.