Mortgage affordability is a key component not only in the ability to purchase a home, but also in how much house you can secure. With mortgage rates on the rise, now is an especially important time to evaluate the significance of rates and their impact on your purchasing power. According to The USAA Educational Foundation, a $900 monthly payment might enable you to qualify for a $188,513 mortgage loan at 4.00% interest, but only a $150,113 loan with an interest rate at 6.00%.* As mortgage rates see an increase, where does that leave you as a buyer? And is now the right time to buy? Apart from a rise in home values over the past year, there is a measurable cost in waiting to purchase. According to The KCM Blog, the impact on a monthly mortgage payment for someone who held out buying a home valued at $200,000 last year falls in at $216.62.** Though mortgage rates are projected to continue to rise, where the numbers will settle is uncertain. Freddie Mac’s VP and chief economist, Frank Nothaft, states, “As the economy continues to improve, we expect to see continued upward movement in long-term interest rates.” Many industry professionals suggest that this is in fact a smart time to purchase as mortgage rates ascend.
*These figures do not include taxes or insurance.
**This figure takes into consideration a 10% increase in home values.