It’s pretty common knowledge as to the importance of interest rates in relation to a mortgage. From the first time home buyer to the seasoned property buying veteran, everybody knows that you should make sure you get the lowest rate that you can possibly get, because the interest rate you pay on your home mortgage has a direct impact on your monthly payment, which ultimately means more money in your pocket. Conversely, the higher the rate the greater the payment will be. That’s why it is important to look at where rates are headed when deciding to buy now or wait until next year.
Below is a chart created using Freddie Mac’s July 2015 U.S. Economic & Housing Marketing Outlook. You can see interest rates are projected to increase steadily over the course of the next 12 months, and most experts agree that after this, they will continue to rise.
At first glance, it appears that .5% of an increase is not a whole lot, and a lot of people would sit back and relax and simply say that they will “purchase some time next year”. 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. In fact, over the course of 30 years, waiting just one year could cost you around $50,000-$70,000, Ouch!
Interest rates have been lower than where they are today. But rates are still historically low and despite the issues with lenders in the past, it’s still relatively easy to get a mortgage without paying 10, 15, 20% down. So if you’re waiting, do yourself a favor and give us a call and let’s get you started. Because if you wait, it could cost you a lot more than missing out on the perfect home.
For more information please contact Justin Lindsey