Sunday, November 1, 2015

How do interest rates really impact your buying power?

What can you really buy for your money?  Well, it depends on where you are buying and what type of property you are buying. This can vary greatly from state to state as well as from the city to the suburbs. I'm a big proponent of considering your future housing needs as well as your current financial situation before you decide to get pre-qualified and start your new home hunting. There are so many factors to consider, such as how long you are going to stay in your area, do you plan on starting or growing a family and how much disposable cash you have for a down payment.

Obviously, the lower th einterest rate, the more home you can buy. But by how much?  Well, for a $300,000 loan, the principal and interest payment for a 30 year fixed rate of 4.0% is $1432.25.  For every change in 0.125% in interest rate, the monthly payment changes by $21.54.  Not as much as you thought, huh?  Yeah, people tend to be a bit over dramatic when it comes to interest rate. In my humble opinion, the most important thing to consider is, "Can you afford the payment comfortably?"

There's also a great article today that addresses that, On The House:  On mortgage rates and what gets people to buy

These interest rates are for the purposes of example only.  You are not guaranteed these rates, you may or may not qualify for a loan.
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