Mortgage Rates Increasing Can Effect What You Can Afford
When you’re buying a home in Oakland County, Michigan, you might think the price you offer is ultimately the price you’ll pay, but if you’re buying a home with a mortgage, that’s not the case. With a mortgage, in addition to paying your principal (the amount of money the bank loans you to purchase your home), you’ll also pay the interest rate on that principal—which is why the mortgage rates increasing on a mortgage loan is so important to you as a home buyer or potential home buyers.
Interest rates on mortgages have been low in recent years, but we have seen them steadily climbing in recent months effecting not only home buyers, but home sellers as well. And even a increase in an interest rate can cost you big over the course of your mortgage. According to a recent article from Realtor.com, thanks to forecasted hikes to the Federal Reserve Key Interest Rate (which directly impacts interest rates on mortgages), mortgage rates increasing upward are expected to continue increasing for the foreseeable future.
As the article demonstrates, even a small increase in your mortgage interest rate can spell major changes in your monthly payment. For example, if interest rates for a 30-year, fixed-rate mortgage increase by one percentage point from the current rate of 4.65%, you’ll pay a whopping $53,000 more over the course of your loan than you would pay if you purchased today.
If you’ve been thinking about purchasing a home, do yourself a favor and make a move now before interest rates go any higher—and save yourself a ton of cash in the process. Let me know your situation and lets find you a home before you spend more than you wish. Give me a call-248-790-5594. Tom Gilliam
Mortgage rate increases have been seen an increase around the Oakland County, Michigan area and there is talk that they may even increase more before the end of the year. Many homebuyers have noticed the increase in home prices but mortgage rate increases are a little bit harder for homebuyers to calculate in the terms of what it will cost them in the long run.
Understand Mortgage Rate Increases
In order for homebuyers to understand how mortgage rate increases will affect them here is a little help. In this model a less than one percent mortgage rate increase would result in a $100 increase in a homebuyer’s mortgage payment. Since the costs of homeownership are influenced by many factors such as what rate at which home prices will increase in Oakland County and what current mortgage rate increases are on the way or forthcoming. Making a specific calculation would be difficult as home prices continue to rise along with mortgage rate increases.
The question becomes, what should home buyers do and what should they expect in the future? Since the economy has become stronger and an improved job market will make it more likely that the Feds will continue to increase mortgage rates throughout this year. On the bright side, mortgage rates continue to be at a historical low still today by any standard, the mortgage rate increases will continue to edge upward taking mortgage payments along with them.
If you are a potential homebuyer in today’s market all of this can be concerning, but there really is no need to panic in regards to mortgage rate increases, and this should not sway you in an emotional hasty home purchase, but rather make you aware of what is expected in the future. My advice would be to start your home search armed with the facts and find the perfect home that you love and are happy with, don’t settle for less than what will make you happy. In the long run owning a home is not only a great investment but is also the place where you will make many memories, raise a family and be a part of the American dream.
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