If you follow the news, you most likely have heard that 70% of economists are predicting that interests rates will climb next month.
While no one but the Fed knows for certain what rates will do next month, there are some things you need to be aware of as you are shopping for a new home should the Fed decide to raise interest rates.
As a buyer, as I am sure you understand, a higher rate means two things: 1.) A higher payment on your mortgage or 2.) Less buying power. A 1% increase in interest rate means your monthly payment on a $300,000 mortgage would go up about $180. Or, it is equal to about $35,000 less in buying power. In other words, if today you qualify for a mortgage with a $1,500 monthly payment, you could borrow roughly $314,000. After a 1% increase in rate, the amount you would qualifying to borrow would drop to $279,000. That's a $35,000 difference! And in today's market, a $35,000 loss in buying power translates to a big difference in house.
With that said, it effects you as a seller as well. If a buyers borrowing power is reduced $35,000, that makes the number of buyers who can afford your house smaller. Less buyers means less chance you are going to get what you want in price for your house.
I don't write this to alarm you but rather keep you informed about the market and what it means to you as a buyer. If you have any questions about this or should you want to make a move now rather than later, I am here to help you. You can call me anytime at (970) 999-2816.