Don’t Wait! Move Up To The House You Always Wanted
Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. In most areas, prices are still below those of a few years ago. Also, interest rates are still near 4%.
However, sellers should realize that waiting to make the move while mortgage rates are projected to increase probably doesn’t make sense. As rates increase, the price of the house you can buy will decrease. Here is a chart detailing this point:
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Sure, but if interest rates rise, housing values will suffer. Everything comes back to affordability. That $400k house at current 3.75% will be ~$365k at 4.75%, so there’s no real rush to buy when interest rates are low. You can buy the same house at a lower price if interest rates rise.
I agree with affordability being a factor. However, a $400,000 loan amount at 3.75% equates to a P&I payment of $1,852/mo. A loan amount of $365,000 at 4.75% is a P&I payment of $1,901. So, in this example, the lower interest rate would offer a lower montly P& I payment for the borrower. Just my humble opinion, and thanks for sharing.
Lower interest rates will always provide more affordability when it comes to housing. If interest rates begin to rise, fewer people will be able to afford buying in general, let alone moving up.