New buyers, move up buyers and sellers – you’re all affected……..
In today’s market, new buyers are trading astronomically high rent payments for the stability of a mortgage, lower monthly payments, and much better living conditions than rental houses and apartments are providing. (Hint: this is important information for sellers also)
The double whammy.
Where are interest rates and home prices headed? The answer to both of these questions has a HUGE impact on your wealth. That is why timing becomes important. Don’t you want to get the best deal on buying a home before the prices rise and before the rates kill your budget? I call it the double whammy for buyers……….
Double Whammy #1: Interest Rates
According to Freddie Mac’s February 2015 U.S. Economic & Housing Marketing Outlook, rates are projected to steadily increase over the course of 2015. So far the numbers are 100% accurate!
How Will This Impact Your Mortgage Payment?
As you can see from the chart, a $1852 budget buys less and less as the interest rate rises. At a 3.75% rate, you could afford a $400,000 home; at 4.0% it decreases to a $360,000 home. Catching the low interest rate becomes an important financial factor. New buyers to the market will be the most negatively impacted by rising rates.