ON THE FENCE ABOUT PURCHASING A HOME? WAITING FOR THE “RIGHT” TIME?
You’ve probably heard it at least a hundred times in the last few years, “Interest rates are at an all time Low.” Well they are, yet some buyers continue to delay the decision to purchase now, hoping rates will go back down to their low in 2012 again. We need to face the facts, those rates are gone! Looking at the chart at the bottom, you can see we all should be thrilled with the rates we have right now! Rate fluctuations do have can impact on purchasing power however. As an example, on a $300,000 purchase, the difference in monthly payment from a 1% rate increase is approximately $150.00. To put it more in perspective, here is a recent article from Realtor Magazine:
Mortgage Rate Fluctuations Have Big Impact
Even the slightest movement in mortgage rates can translate into more – or less – purchasing power for your clients.John Burns Real Estate Consulting recently looked at how the fluctuation in rates effects the average consumer. The firm found that a typical family earning $60,000 a year could afford around $1,800 month for the mortgage payment.In 2000, a 30-year fixed-rate loan, which averaged an 8 percent mortgage rate, would have qualified that family for a $245,000 loan.But at a 4 percent mortgage rate – which current rates are averaging – that same family can qualify for a $377,000 loan.”In other words, each 1 percent drop in interest rates in the last 15 years has allowed home sellers to raise the price 12 percent,” according to Jon Burns Real Estate Consulting’s analysis.
Source: “How Tiny Mortgage Rate Moves Can Buy You a Lot,” CNBC (March 10, 2015)
I am sure a lot of home buyers right now would be surprised at the historical mortgage rates and where they are expected to go. This rate chart from FreddieMac as some projections for the coming years.
I hope it makes the decision a little easier for the many buyers out there who are trying to decide just when to start the process of searching for and buying a home.
Please call me with any questions, there will never be any obligation or pressure, ever.