Interest Rates Determine What You Can Buy
Each time you hear the news that the interest rates are climbing you should think about why you are waiting. A point it really doesn't matter, right????
Yes it matters. The new lending rules have gotten stricter on the ratios you can have for debt to income, 38% Max. When you factor in taxes and insurance sometimes a point can be the difference between you getting the property you want or having to settle for your second choice.
On at purchase price of $100,000 at 4.875% (todays rate) your payment would be $529.21 before taxes and insurance are added. If the rates were 5.875% your payment would be $591.54. This is based on a 30 year fixed conventional rate. If your credit score is less than 700 you will have to have 20% down to go conventional.
As the interest rates go up the inventory of homes go down. If you are waiting for the price to come down or for the interest rate to go lower, you might want to rethink this plan.
Please contact us if you have any questions or comments.