Mortgage Interest Rates Just Went Up… Should I Wait to Buy?

Mortgage Interest Rates Just Went Up… Should I Wait to Buy? | Latina on Real Estate

Mortgage interest rates, as reported by Freddie Mac, have increased over the several weeks. Along with Freddie MacFannie Mae, the Mortgage Bankers Association and the National Association of Realtors are all calling for mortgage rates to continue to rise over the next four quarters.

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Why Are Mortgage Interest Rates Increasing?

Why Are Mortgage Interest Rates Increasing? | Latina on Real Estate

According to Freddie Mac’s latest Primary Mortgage Market Survey, the 30-year fixed rate mortgage interest rate jumped up to 3.94% last week. Interest rates had been hovering around 3.5% since June, and many are wondering why there has been such a significant increase so quickly. 

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Buying is Now 37.7% Cheaper Than Renting in the US

Buying is Now 37.7% Cheaper Than Renting in the US | Latina on Real Estate

The results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

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How Historically Low Interest Rates Increase Your Purchasing Power

How Historically Low Interest Rates Increase Your Purchasing Power | Latina on Real Estate

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.47%. Rates have remained at or below 3.5% each of the last 16 weeks, marking a historic low.

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments at or about $1,100 a month.

How Historically Low Interest Rates Increase Your Purchasing Power | Latina on Real Estate

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5%, (in this example, $6,250). Experts predict that mortgage rates will be closer to 4% by this time next year.

Act now to get the most house for your hard earned money.