How Today's Mortgage Rates Affect Your Home Purchase
It's important to comprehend the connection between the mortgage rate, your buying power, and home buying. The purchasing power is the amount of money for the home you are able to purchase that is within your budget. Mortgage rates directly impact the monthly payments you'll make on the house you buy by increasing the interest you pay for the home every month. When rates rise, so will the monthly payments you can lock in on your home loan. In a situation of rising rates like the one we're currently in, it could limit your future purchasing capacity.
Today as of May 9th, 2022, the average 30-year fixed mortgage rate is higher than 5%, and in the near term, experts say that'll likely increase in the months ahead. If you act now, you can get ahead of the rise in your purchasing power.
If you purchase a home that is worth $360,000 and you lock in an interest rate of 5 the monthly amount (principal plus interest) will be $1.933. Your monthly payment will now be $2,158 if that percentage increases to 6%. That 1% increase has now cost you an extra $225 per month. To avoid future increases, it is important to ensure that you lock in your mortgage rate as soon as you can. The Ellerbrake Group is available to answer any questions you might have about local lenders.
Create a Plan with Your Realtor and Lender
There is a greater chance of exceeding the amount you want to pay as mortgage rates increase in the event that you do not take a smaller mortgage amount. It is possible to use this as a reason to purchase a home now to save yourself from the increasing interest rates. You can save interest by opting for a smaller home however, you'll need to compromise on what you'd like to have.
To set a budget you feel comfortable with, work with an established local lending institution. They can also assist to determine the best home price. The lender will offer you an estimated price for your home, so you can begin looking at houses within your budget.
The Housing Market is Strong
No matter what your circumstances are, it's best to consult with your trusted lender as well as your real estate agent to develop strategies that take into consideration the rising rates of mortgages. Together, you can examine your budget based on where rates are currently and develop your plan to be ready to adjust as rates change.
Even with the recent rise in mortgage rates the demand for real estate remains strong. The housing market is also steady If you're thinking of selling, this could be the ideal time to sell since properties are continuing to sell fast and quickly.
Ellerbrake Group
Address: 1003 E Wesley Dr # C, O'Fallon, IL 62269
Phone: (618) 632-0001
Email: [email protected]
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Dream Homes With Jake
Address: 1003 East Wesley Drive Suite C, O'Fallon, IL 62269
Phone: 844-913-2857
Email: [email protected]
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