Interest Rates are on the Rise—How Does This Affect Buying Power?

Mortgage rates increased in 2017, though they were moderate and steady, without large, sudden spikes.  While rates remained elevated for most of the year, on average they hovered just around the 4.00% to 4.25% mark.

But what about 2018? Experts have predicted another spike by the end of the year to an average 4.50 to 4.75% mark.  The mortgage interest rate plays a large part in how much money your lender will let you borrow, which in turn affects how much home you can buy.

So how does your purchasing power change if rates creep up a half-point or even one full percentage point?  Much more than you might think.  For example, if you are borrowing $200,000 for a home at a rate of 4.25% and the rate spikes to 4.75%, you will see about a $60 difference in your monthly payment.  Over the life of a 30-year mortgage that adds up to a $21,600 difference.

It pays to shop for a home now to lock in a favorable fixed rate while they are at historic lows.  If you’ve decided to buy a home but are not sure when you should, it could be time to act!

Check out the Hamilton Group’s convenient Principal and Interest Payment Calculator to learn more about how interest rates affect your buying power.

Guest blog provided by:

 

 

 

 

Natalie J. Dillard
Sales Manager / Mortgage Loan Officer
3844 Clemmons Road, Unit B | Clemmons, NC  27012
Cell: 336-692-0426  Office: 336-589-6671  efax: 888-336-2885
Branch NMLS # 1624768 | MLO NMLS # 71839