Mortgage Interest Rates Have A High Impact On Purchasing Power
In a recent finding from Freddie Mac's "Primary Mortgage Market Survey", thirty-year fixed interest rates are currently at 4.61%, which is still close to historic lows in comparison to record history.
The interest rate you qualify for when buying a home has a significant affect on your monthly housing costs. In addition, it also has a great impact on your purchasing power.
In easy terms, Purchasing power is the amount of home you can afford to buy for the amount of budgeted money you have to spend. As interest rates go up, the price of a home you can afford to purchase goes down if you plan to respect a monthly housing budget.
To explain this further, the chart below illustrates the impact of rising interest rates would have if you intended to buy a home at or within the national median price range, while staying between $1,850 - $1,900 a month for Principle and Interest payments.
For every quarter of a precent raise in interest rates, the total value of the home you can afford to buy decreases by 2.5% ($10,000 in this example).
Predictions are that mortgage interest rates will hover around 5% by summer 2018.
If you have questions about Fort Lauderdale real estate or would like to begin the home-buying process, call/text or email me to get started!
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Disclaimer:The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia PA and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia PA and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.