The interest rate you pay on your home mortgage has a direct impact on your monthly payment; the higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.
Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next year.
How Will This Impact Your Mortgage Payment?
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
$250,000 mortgage x 4.8% interest rate (30 yr)= $1,312 monthly payment
$250,000 mortgage x 5.3% interest rate (30 yr)= $1,388 monthly payment
According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.2% from this time last year and are predicted to be 5.1% higher next year.
If both the predictions of home price and interest rate increases become a reality, families would wind up paying considerably more for their next homes.
Even a small increase in interest rate can impact your family’s budget. Discuss this further with any of our Experts if you are interested in exploring your options.
Source: Keeping Current Matters