If you thought interest rates would stay in the 3%’s forever, you were wrong! After over 18 months of interest rates hanging around in the 3%’s, we have finally seen a hike. Interest rates jumped over a full point within a 3 week period. Although it sounds like some buyers may have missed the boat, this is not the case at all.
The average rate for a typical 30-year fixed mortgage, including principle and interest is currently on average 4.5%, rising from the previous month of 3.5%-3.9%. For the average buyer between $150,000-$400,000, monthly payments do not go up dramatically. For a $300,000 mortgage, the difference in payment going from a 3.5% interest rate to a 4.5% interest rate is approxemetely $173.00 per month based on a 30 year fixed loan.
If this increase in payment is too much for a consumer to handle, they can reduce the purchase price of the home they are looking for slightly, approxemetely 7%. Again, we have been spoiled because even at 4.5%, interest rates are still extremely low historically. Take advantage. There are no sure signs that rates will be getting any better. Rising interest rates often cause people to act quickly and jump into the housing market – which can start to increase home prices in tight inventory markets as these potential buyers get more serious about homeownership.
If you have been on the fence about purchasing a home, I would act sooner than later. Consult with an experienced Realtor and mortgage broker to come up with a plan and establish your purchasing power and what you are comfortable spending. Another thing to consider is meeting with your tax consultant to see how the interest write off will affect your monthy payment and your affordability.
Start acting sooner than later! You see the market is changing and interest rates are on the rise. Don’t wait until you are priced out of the market. Start getting your finances in order and looking at your savings to see what type of down payment you are comfortable with. Down Payments start at 3.5% for FHA and go up from there. Buying a home is a lengthy process and and there is much to understand so make sure you align yourself with the right people to put yourself in the best position.
Now you are ready to start the process of home ownership!
For any additional questions or to work with me personally, please contact me directly at 619-887-2800.