The home buying process can be nerve-wracking; you need to look around for the best homes and the best deals. Especially nowadays, most of us have known that interest rates for home loans are increasing, and one thing that we anticipate is that it has been increasing every year for some time now.
We have seen two interest rates increase so far this year and we are also expecting another one this year for a total of three; you do not want to get caught up in that.
“ So, one of the main tips that I wanted to share with you is that, for every 1% increase in interest rate, this will affect your pre-approval by up to 10%. “
If we’re going to make an offer for a $300,000 purchase price, that is bringing us down to about $270,000 or so in purchasing power. Depending on what kind of home you’re looking for that could have a pretty big effect on what you are trying to purchase. We are still seeing the market remain in trending with current prices while some are still increasing. This starts to affect affordability as a whole for a lot of buyers who are needing to move within a short period of time. While we are seeing smaller increases in rates that do not have as much of an impact, it does slowly affect your overall purchasing power. Even though having a great credit score can help lower your rate, this will not be enough alone to counter the increases we have been seeing.
Although interest rates are still increasing, they are still near historic lows and well worth taking advantage of. Unlike rent, with a fixed rate loan, your monthly payment will never increase.
“ Another thing I also like to share with clients is that, for every $1,000 in the overall purchase price, it will impact the monthly mortgage by about $7 per month. “
This can give or take slightly but it is mainly impacted by your current interest rate of your loan. Often times when negotiating, it feels like a few thousand dollars more can really be a deal breaker but once you can see the monthly payments, sometimes it is worth it for the right home rather than losing it for a few thousand as a whole. Do not let the cost of a Starbucks coffee be the difference of getting your dream home or settling, make sure you negotiate with all the facts on your side!