Luxury Valley Homes Arizona Real Estate Blog: October 2016

How Historically Low Interest Rates Increase Your Purchasing Power

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 to 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.

Buyer's Purchasing Power

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.

People that read this article also liked the following:

What to Expect When Home Inspecting

Distressed Property Sales Hits New Low

Comment balloon 0 commentsJane & Jeff Daley, PhD • October 26 2016 02:14PM
How Historically Low Interest Rates Increase Your Purchasing Power
share
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… more
Starting to Look for a Home? Know What You WANT vs. What You NEED
share
In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search. If you’ve been thinking about buying a home of your own for some time now, you’ve probably come… more
Buying is Now 37. 7% Cheaper Than Renting in the US
share
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. The updated numbers actually show that… more