How do rising interest rates affect you? I’ll go over a couple of things you should know if you plan on buying or selling a home.
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There have been a lot of questions about rising interest rates lately.
The good news is that mortgage rates are still extremely attractive and hovering around 4%. Financing is readily available, and you can get a home loan with 10%, 5%, or 3% down. If you qualify for a VA loan or want to buy in certain rural areas, you can get a home with no down payment at all.
What happens if interest rates go up in a year or two years from now?
While we don’t know what rates will be, let’s say they go up to 6%. If you’re looking at a $200,000 house, your monthly payment would go up $273 a month thanks to your 6% interest rate; you would have to pay $1,192 a month. So, if you want to wait to buy a home, it could cost you more down the line.
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Also, let’s say that you qualify for a $200,000 house at a 3.75% interest rate. If rates go up to 6%, you would only qualify for a $155,000 house.
If you wait to buy a home, your monthly payments will go up with interest rates.
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Rising rates dramatically impact your purchasing power.
There are two advantages to buying today. First, you will have a lower monthly payment for as long as you own the home. Second, if you do want to buy a home, then you will qualify for a lot more home now than you will in a couple of years (assuming that the rates go up).
Right now, you have a great selection of homes on the market. If you are looking to sell and then buy, doing so now is fairly predictable, as most houses are selling in two to eight weeks.
So if you are interested in buying or selling a home, or if you have any other real estate questions, just give me a call or send me an email. I would be happy to help you!
