It is often hard for buyers, particularly first time home buyers, to understand the implications a higher interest rate has on their purchasing power, but this graphic, provided by Chris Juarez of Academy Mortgage does an excellent job at illustrating exactly what effects a 1% increase in interest rate does to a buyer’s purchasing power. As illustrated in the image below, a 1% increase in interest rates reduces a buyers purchasing power by almost $40,000. Stated in another way, a buyer will still pay the same percentage as a down payment, and they’ll pay the exact same amount every month for their mortgage payment, but the house they buy will have to be almost $40,000 less IF interest rates go up even 1%.
The fed have announced that interest rates are going to rise, so if you are thinking about buying a home, please contact your Q Realty broker or your lender to get locked in on a rate today, while they’re still low.
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