New reports are revealing that the number of existing home owners purchasing a house is beginning to increase as well. Some are moving up, some are downsizing and others are making a lateral move. Getting a mortgage hasn’t been an easy ride in the past few years. Lender requirements are strict, to the point where borrowers would simply shake their heads. Though the market is on the road of recovery, lender guidelines have remained strict and are now even coupled with rising interest rates. Have you lately checked just how much house you can afford now and how a one interest point uptick affects your purchasing power?
There is no way for anyone to predict the future but we can look at what happened over the last year. As an example: Let’s look at buyers that considered moving up last year but decided to wait instead.
Assume they had a home worth $300,000 and were looking at a home for $400,000 (putting 10% down they would get a mortgage of $360,000). By waiting, their house appreciated by 12% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $336,000. But, the $400,000 home would now be worth $448,000 (requiring a mortgage of $403,200).
Here is a table showing what additional monthly cost would be incurred by waiting:
If your family sees yourself in this situation, it may make sense to move now than later. Prices are definitely appreciating and interest rates are beginning to rise.
Lots to think about. Give me a call to see how much your home is worth and/or to look for a new home.
==>Talk to a local lender to get pre-approved and learn what a change in interest rates means to you