Mortgage interest rates are one of the hottest topics with homebuyers right now. Many buyers are currently wondering whether they should wait for interest rates to go back down, but they are only expected to go up. The Federal Reserve has already increased rates and signaled that there are more increases to come.
The days of 3% interest rates are gone right now, but the good news is that rates are still at historic lows at about 4% currently. Here’s an example of why it’s smart to buy now and lock in a low rate rather than waiting six months or a year.
For a $250,000 house under current rates, your principal and interest payments would be about $1,189 a month. Conservatively estimating that the house will appreciate 5%, waiting a year would mean the same house would cost about $262,500. If interest rates went up 0.5% this year as expected, the same house would cost you an additional $136 a month.
If you’re selling your house, remember that as rates tick up, the buyer pool for your home shrinks since fewer people will qualify for your home at an increased price. If a buyer’s income doesn’t go up, they might be priced out of that house.
Buying a home sooner also means you will start building equity sooner in addition to getting it cheaper. There’s really no reason to wait and watch interest rates and home values continue to go up.
If you have any mortgage or financing questions for Trever, you can call him at (972) 822-7408 or email him at Trever.Kerr@GatewayLoan.com.
If you have any questions about the Mansfield real estate market or you’re thinking of buying or selling a home, you can always give me a call or send me an email. I’m here to help.