At present, 30-year mortgage interest rates remain close to their historical lows. Experts predict that rates will likely increase throughout 2016. According to Freddie Mac, 30-year mortgage interest rates are projected to finish 2016 at or near 4.6%. What does this mean for someone who is looking to purchase a home? Surprisingly, a relatively small percentage change in the interest rate results in a rather abrupt change in the monthly principal and interest payment.
For instance, if you are looking to purchase a home and want to keep
the principal and interest payment at $1,000 per month, the initial
principal balance
that could be afforded at an interest rate of 3.875% is $212,659. If
you wait, and the interest rate rises as predicted to 4.6%, the
principal balance
that you could afford (and keep your monthly payment at $1,000) is
only $195,067. Simply stated, if the experts are correct, there will
be a very real
financial consequence for those who choose to wait to buy a home.
I understand there are many things one must consider when purchasing a home and financial considerations are but one factor. Should you be interested in exploring your home purchasing options, I welcome you to contact me at any time to discuss your options.
