We all know that higher rates are no good for the home buyer (or the seller for that matter) but do we understand how it really affects the buyer in his/her home search?
I asked my lender to put together a little scenario...
Let's say our buyer qualifies for a mortgage payment of $1432/month. At a rate of 4%, they can purchase a home valued at $300K. Increasing the rate to 5% (all other conditions remain the same) the same buyer can now only afford to spend $267K on their new home. WHAT??!! They are essentially paying $1432/month for a $267K home instead of the nicer $300K home. They have effectively reduced their buying power by $33K with a 1% rate increase.
This graph shows rate trends for the last 12 months. If you've been on the fence about buying or selling now or waiting it out, you may miss out altogether. Call me today and let's formulate a plan. My cell is 225-571-8667.
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