Low Interest Rates Make Huge Difference on Your Purchasing Power
Interest rates for a 30 year fixed rate mortgage are currently around 3.92% according to Freddie Mac's latest Primary Mortgage Market Survey which is still near record lows when comparing to the last 50-60 years. Your purchasing power and the amount of home you can afford is greatly impacted by the interest rate you secure when buying a home so make sure to plan out your 2018 plans in a winning way.
Purchase Power Defined - The amount of home you can afford to buy for the budget you have available to spend. The price of house you can afford decreases as rates increase. Note: The same applies as housing prices go up.
The graphic below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.
With each .25 percent increase in interest rate, the value of the home you can afford decreases by 2.5% (this example shows $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.
Home Appreciation Factor - Homes locally could increase in value by around 6% in 2018. So in this example your dream home of $400,000 could turn into $424,000 by year end pushing your purchase power even further down.
Conclusion:
Make sure you schedule a meeting with your Colorado Springs Realtor to better advise you on your plans and what is best for your situation no matter how far out your home buying plans are.
