Thursday, April 6, 2017

Interest Rates on the Rise? NOW is the time to Buy!

In the Real Estate world in North Texas, we have enjoyed not only large homes for the money spent, but have had the luxury of buying power through the advantage of low interest rates.   Based on information from Wells Fargo Mortgage, below is a snapshot of the current rates:
ProductInterest RateAPR
Conforming and Government Loans
30-Year Fixed Rate4.125%4.186%
30-Year Fixed-Rate FHA4.375%5.389%
30-Year Fixed-Rate VA3.875%4.171%
But, could interest rates be on the way up?  Consensus believes so and they may be on the rise sooner than you think.  According to this article from CNBC, the outlook for interest rates rising is eminent.  You can read that article here
So, what does all this mean for you, Joe & Jane Homebuyer?  Let’s take a look.
Let’s assume you are purchasing a $200,000 home with a 30 year fixed rate of 4.125%.  Your monthly principle and interest payment would amount to the following:
Mortgage amount                               Interest rate (%)                      Mortgage period (years)
$200,000                                                   4.125%                                           30
Total cost of mortgage
Monthly payments
Now, lets look at what a 0.5% jump in interest would do to that same scenario:
Mortgage amount                               Interest rate (%)                      Mortgage period (years)
$200,000                                                  4.625%                                            30
Total cost of mortgage
Monthly payments
22The difference is about $59 per month or $708 per year.  Over the life of the loan, that translates to a whopping $21,240 in extra interest just by raising a half percent.
Playing the waiting game for purchasing a home is kind of like shooting dice in Vegas.  Remember, they don’t call it Lost Wages for nothing.  With this information and the current outlook of what is on the horizon, you can surely see that
The converse of this statement is also true.  If you are thinking of selling, there is not a better time to do that!  Sellers are getting a premium amount for their home and while doing that, they have the luxury of the low interest rates that give people buying power.  That same buying power is extended to sellers as well. 
Being in a seller’s market isn’t always a bad thing.  Sure, a buyer may pay a little more for a home, but over time, with interest rates low, you will have a better investment and one that will hold its value or appreciate over time. 
If you are thinking of buying or selling, please call/text me at 972-896-8046 or email me at I would love to help you navigate the waters of real estate and get you the best price possible.