What You Need to Know About Rising Interest Rates
Filed under: Real Estate Market
It always seems to be a roller coaster ride when it comes to interest rates – the numbers go up and down over the years. Currently, rates are going up, which means that the interest costs on a loan are higher. Ask the experts and they will tell you that rates will likely continue to increase, especially since the Fed keeps announcing rate increases.
Just because interest rates are going up, doesn’t mean that you don’t have financing options. Here are a few things you need to know.
How Higher Interest Rates Affect Mortgage Payments
A higher interest rate means that you have less money in the loan to put towards the purchase of your home. This is the general rule of thumb: when the interest rate goes up by a quarter point, then it means that you have $10,000 less available for the value of your home purchase.
So, it’s essential to look at interest rates when you are choosing a budget for your home. You’ll need extra room in the loan to accommodate the accrual of interest costs.
At the same time, real estate prices are high. But you can still find the right deal to ensure your property appreciation will be higher than the interest accrual. The key is to focus on your long-term real estate strategy with the goal of paying off the property.
Focusing on the Future
Remember that home prices might continue increasing, which means that it might not make sense to wait for rates to drop. We never know what the future has in store, so you need to work with the current conditions and make the decisions that are best for your family in this current time.
When you are ready to buy real estate, look at the price of the home as well as the interest you will be paying. Your mortgage lender can help you evaluate the real numbers so you can see what the overall picture looks like in the future.
Even though we can’t predict what will happen in the coming years, rest assured knowing there are options available to maximize your real estate investment. Reach out to my team to learn about the best strategies for finding a home that will work for your budget.
We help homeowners who are buying and selling real estate in Temecula. Call, text, or email me any time: (951) 473-0390 or [email protected].