Since the election back in November 2016, interest rates have risen about 1.0%. If you are looking to purchase a home this year, the impact of a 1.0% increase in the interest rate breaks down as follows:
Let’s say you are looking for a $300,000 mortgage. Prior to the election, the interest rates were about 3.5% which equates to a principal and interest payment of $1,349. Today, the interest rate is about 4.5% which makes that same principal and interest payment $1,521, a difference of $172 a month or $61,920 over the life of your 30-year mortgage—wow! For some buyers, that $172/month change in payment may be the difference of qualifying for a loan or not. Unfortunately, the rate increase recently pushed one of our buyers out of the market.
The economic experts are projecting interest rates to continue to rise in 2017 so if you are looking to purchase a home do not wait as you are literally costing yourself thousands of dollars. You may have missed the all-time lowest interest rates on the planet but you will still be well below the historical average rate of around 8.0% so don’t beat yourself up too badly!
If you need help with prequalifying for a loan and finding a home, please contact The Donnelly Group at 443-308-4918 and a member of our buyer team will be happy to help!