Craig Builders

Rising Mortgage Rates- What you need to know

Over the last week, every client I’ve met with has had at least one thing in common with all of my other clients—they’re all asking about rates.

If you haven’t seen the news or read the paper over the last week, you probably heard Ben Bernanke and the Federal Reserve announce on Wednesday that they will likely begin to reduce the bond purchasing program by the end of this year. What this means for everyone thinking about purchasing a home in the next 12 months is this: interest rates will likely be going up.

If you’re reading this and you’re anything like some of the other folks I’ve sat down with this week, this is a cause for concern.

Although this is not welcomed news, it’s important to keep this news in perspective.  The historical average for 30 Year home loans is 5.5 percent. With rates currently hovering around 4 percent we’re still well below the historical average.

For anyone that’s been on the fence about purchasing a new home, it’d be a good time to sit down and look at the difference in what you’ll be able to afford if rates continue to rise.

A one-point rise in the interest rate on a $300,000 home would result in approximately $150 more per month in your monthly payment. What this means for buyers is that you can purchase a $325,000 home now for the same monthly payment as a $300,000 home if today’s rates rise a full point.

See the below video for a great recap of these recent events and as always, feel free to reach out with any questions! - TJ Southmayd Email

VIDEO: Why are mortgage interest rates rising?