What Happens to Your Ability to Buy a Home When the Rates Go Up?
Over the last few years I think we have gotten a little spoiled. Interest rates today are still below 4% for many loan programs. These rates are historically low.
What does that mean for someone buying a home today? It means much more buying power. Today’s buyer can get a lot more home for his monthly payment.
Let’s say rates today were 6%. (And 6% is a very low figure if you go back over the last 50 years.) A buyer of a $300,000 home, putting only 3.5% down payment, could expect his total monthly payment, including taxes and insurance and mortgage payment to be around $2300.
At today’s rates of about 3.75%, that same $2300 will allow the buyer to purchase a home at around $360,000. So, his buying power increased by about 20%!
( PS: Home buyers in this price range can take advantage of about $17,500 worth of tax deductions!)
And, did you know that interest rates were over 6% less than 10 years ago. That’s right, around 2008, interest rates were about 6.5%.
So, take advantage of these low rates while we still have them. If you have considered purchasing a home, this is the time to get educated and start the process. I would be happy to talk with you about the home buying process.