What the Current Mortgage Rates Mean for Your Home Purchase
It is important to understand the connection between mortgage rates, purchasing power, and home buying. Purchasing power is the amount of money you'll need for a home you can afford to buy within your financial reach. The mortgage rates directly affect the monthly payment you'll have on the home you purchase by increasing the amount of interest that you pay for the house each month. Rates rise and so do your monthly home loan amount. This could affect your purchasing capacity in the future, especially in an environment of rising rates similar to the one we're experiencing.
On May 9, 2022, the average 30-year fixed rate mortgage rate was higher than five percent. Experts believe that it will increase in the coming months. If you take action now, you'll be ahead of the rise in the purchasing power of your home.
If you purchase a house worth $360,000 and secure the interest rate at 5 then your monthly installment (principal plus interest) will be $1.933. If that percentage rises to 6 percent then your monthly installment is currently $2,158. The 1% increase already costs you an additional $225 each month. This is why we suggest locking your mortgage interest rate at the earliest opportunity to avoid an increase. The Ellerbrake Group is available to answer any questions you may have regarding local lenders.
Craft A Plan With Your Realtor and your Lender
If you are offered a lesser home loan amount, your chances of exceeding your target payment range increase. If you're looking to purchase an apartment, consider this as your motivation to buy now so that you can get ahead of rising interest rates before you have to decide to reduce the amount you take out so that you can stay within your budget. If you must opt for a smaller home then you will not have to pay the extra cost of interest, but you will have to find a home that is different than what you are interested in.
Work with a local lender to determine a budget that you feel comfortable with. They will help you determine what your max home price needs to be. The lender will offer you an estimated price for your house so that you can begin looking at houses within your price range.
The Housing Market is Still Solid
Whatever the case you decide to do, the most effective plan of approach is to collaborate together with your real estate professional and a trusted lender to devise a strategy that takes rising mortgage rates into consideration. Together, you'll be able to analyze your budget in relation to where rates are currently and develop a plan so you're ready to adapt as rates fluctuate.
Despite the recent rise in mortgage rates, demand for real estate remains strong. Prices for homes are in good shape If you're looking to sell, now is a perfect time considering that properties continue to sell fast and quickly.
Address: 1003 E Wesley Dr # C, O'Fallon, IL 62269
Phone: (618) 632-0001
Email: [email protected]
Address: 1003 East Wesley Drive Suite C, O'Fallon, IL 62269
Email: [email protected]