Interest rates are predicted to climb to 5% by the end of the year, which means that now is the time to both buy and sell in our current market.
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Where are interest rates headed and how will that affect your buying power?
Right now, interest rates are at 4.5%. This means that if you bought a $300,000 home at this rate with a down payment of 10% and added a principal mortgage insurance payment of $110, your total monthly mortgage payment would be $1,460.
At the start of 2018, interest rates were at 4%. At the end of the year, they’re expected to be near 5%. Interestingly enough, rates were near 6% before the recession. Now they are moving back toward that previous mark which is a sign our economy is doing well. Even if rates do rise to 5% by the end of the year, they are still at a historically low mark.
If you wait to buy, you’ll end up with a higher mortgage payment.
Now, if you bought that same $300,000 house at a 5% rate with the same 10% down payment and the factored in a new principal mortgage insurance payment of $41, your total monthly mortgage payment would be $1,541.
That’s an $81-per-month difference, which can really add up over the entire life of a loan.
That’s what rising interest rates mean for buyers, but what about sellers? If you’re a seller, it means that as time goes on, the pool of buyers who can afford your home will get smaller and smaller.
In short, there’s never been a better time to buy or sell in our current market.
If you have any questions or you’re thinking of buying or selling, don’t hesitate to reach out to us. We’d love to help you.