Mortgage rates have been increasing this year but what many analysts don’t talk about is how rising mortgage interest rates really affect home buyers.
We will break down how rising mortgage interest rates really affect your chance of buying a home in Orange County.
Should you buy a house or condo now or wait?
Let’s say that the current mortgage interest rate is 3.9% and you are interested in buying a townhome for $200,000.
If you were to get a 30-year fixed mortgage loan with a 3.9 percent, 30-year fixed mortgage interest rate you can expect to pay a monthly principal and interest mortgage payment of $943.
Now let’s say that mortgage interest rates increase by 0.5% by the fall 2015; for that same $200,000 townhome your mortgage payment will increase by about $50 more per month when you have a 30-year fixed mortgage loan.
Although a $50 per month change in price isn’t that much, the reality is that buying a home could become unaffordable for some if mortgage interest rates were to increase to 5 or even 6 percent within the next 12 months and that’s why it pays to act now if you’re thinking about buying a home.
Smaller Home Inventory
Another reason to buy a home in Orange County now is the real possibility that we will see a smaller inventory of homes to choose from in the next 12-24 months if mortgage interest rates do increase.
The reason why we might see a smaller inventory of homes in the next one to two years is because there will be some homeowners with mortgage interest rates at 4% or lower who might not want to move to another home and face the prospect of having a more expensive mortgage payment if mortgage interest rate increase by 1 percent or more in coming year.
To learn more about mortgage interest rates and how these affect you, or to view the latest Orange County homes for sale, contact Fred Sed & Associates today by calling us at (949) 272-0125.