Interest Rates Rising: Should You Be Concerned?
Filed under: Mortgage Rates
The Feds have been vocal about increasing interest rates. The rates are higher now compared to a few years ago, and it’s possible that we will continue to see an increase in interest rates with time.
How Interest Rates Affect Your Mortgage Payment
What does a higher interest rate mean for your housing paying? It’s roughly $10,000. The rule of thumb is that if rates go up by a quarter point, it is going to affect your buying power by about $10,000. This change means that you can buy $10,000 less on the price of your new home.
However, if the home market fails to decline at least $10,000 and your rates go up by a quarter point, you may have been better off buying at a lower rate rather than waiting for a future decline in price and having rates go down.
Something to Think About
If you are waiting for prices to decrease before you buy, then prices need to decrease by $10,000 for every rate hike that we see. If the prices don’t come down enough in that timeframe, then you actually may be paying more for the home in the future even if the prices come down slightly. You need to calculate the amount of interest that will be paid over time, instead of only looking at the selling price of the home.
Long Term Strategy
While it is important to think about the timing of buying a home, you can’t predict the way the real estate market will change in the future. The best solution is to think about the long-term strategy: your goal to have the home paid in full so that you can enjoy a mortgage-free lifestyle in retirement.
If you are looking for quality real estate services in the Temecula area, then I am here to help. I’d love to talk to you about your options for buying or selling a home to meet the needs of your family. Call, text or email: (951) 473-0390 or [email protected]