The real estate industry touts "historically low rates" but what does that mean to the average consumer at face value? Not much. Thanks to my friend and Senior Loan Officer, Andy House, for the incredible graph above to help put the current rates into perspective.
Interest rates matter. They matter a LOT and directly affect not only Buyers, but homeowners who wish to refinance.
Most Buyers are payment-driven. They know how much they can afford to pay each month even before they obtain an official pre approval.
FOR EXAMPLE: Let's assume that you are comfortable with a $1,250 interest payment...
Your housing affordability DROPS with each increase in the mortgage interest rate.
Per above, if mortgage rates rose up just 1% from 3.75% to 4.75%, you would lose a whopping $33,750, or 11.25% of your purchasing power. If rates rose 2% to 5.75%, you would lose $62,003 or 20.67% of your purchasing power. That is serious money, people!
In short: the lower the interest rate, the more house you can afford for the SAME PAYMENT. Rates directly impact your affordability, Buyers. Don't let these great ones slip by as 3rd quarter increases are projected.
If you are contemplating a purchase over the next few months, I highly recommend getting a loan preapproval now. It is the first step of the buying process, and rates are still comfortably hovering below 4%.
Learn more about Andy House HERE and feel free to contact him directly for a free approval or mortgage advice. He is stellar, my clients love him, and I trust him emphatically after years of wonderful service to myself and my clients.
