Waiting until next year could cost you.
We are seeing a trend of rising interest rates going into next year. While slight changes in interest rates might not seem like a big deal, truly it can make a difference in the home you can afford. Your “dream” home may look significantly different next year.
Let’s say you are looking at purchasing a home listed for $500,000. If rates went up a half point, and you wanted to keep your payment the same, what does that mean to your purchase power? The amortization of most mortgages is for 30 years. If your down payment is a constant 20 percent of the sales price, what happens to your home price parameters to keep your payment around $1,900?
You can see that a 2 percent increase in an interest rate would lose you about $120,000 of purchasing power in this price range.
This is why interest rates play a huge factor and keeping an eye on them is critical. If you are stretched too close to the top end of your price point and rates go up, you might not be able to buy that dream home you want because you will no longer qualify for that sales price.
Now is the time to consider buying if you want to maximize what your new home looks and feels like. We’d love to help you! Let’s chat and take advantage of the lower interest rates today.
Olivia Carlson – olivia@oliviaschicago.com
INTEREST RATE PAYMENT COMPARISON
| Home Price | % Down | Mortgage | Rate | Payment |
% Difference in Home Price
|
| $500,000 | 20% | $400,000 | 4.00% | $1,910 | |
| $452,400 | 20% | $377,000 | 4.50% | $1,910 | -9.52% |
| $426,840 | 20% | $355,700 | 5.00% | $1,909 | -14.63% |
| $403,800 | 20% | $336,500 | 5.50% | $1,911 | -19.24% |
| $382,200 | 20% | $318,500 | 6.00% | $1,910 | -23.56% |