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How does a higher interest rate affect your mortgage payment? -

Monday, December 12, 2016   /   by David Veenstra

How does a higher interest rate affect your mortgage payment? -

Kalamazoo real estate: Since the election, interest  rates have started going up.  Higher interest rates will have a direct effect on the cost that home buyers will pay for housing.  There is a rule of thumb that a ½% change in interest is approximately equal to 5% change in price. Stated another way,  if the interest rate goes up by ½%  the impact on your budget is almost the same as having to pay 5% more on the price of the house.  That means the monthly payment for a $250,000 house that you can purchase at today's interest rates would cost you the same as if you are buying that same house for $262,500 once the interest rates go up 5%. 14439217-250.jpg

If you wait until interest rates go up, it will cost you more each month to live in the very same home. If you would want to keep your monthly payments about the same you will have to purchase a lower priced home.   

To get the most value for your money, it may be the best time to purchase a home now.....before rates rise too much. This holds true for both your main residence or a rental/investment property.  Low interest rates and lower prices make housing more affordable.

Here are a couple specific examples of how the interest rate affects the amount of the monthly mortgage payment you must make.

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If you are interested in purchasing a greater Kalamazoo home or a greater Grand Rapids area home, the Veenstra Team is able to help.  Give us a call today and we can make sure you have the best tools and step by step guidance to accomplish your real estate goals and save you the most amount of money!    If you have a home to sell before you can purchase, we will do the research and tell you what your house is worth in today's market.  Houses are selling right now!  Last week we put a house on the market and we had 5 buyers come through and got 2 offers in the first day!  

There are still many great homes on the market and waiting for the spring market may end up costing you much more.  

Give us a call at 269-350-5514 or click here to complete a form and we will get in touch with you.  

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Information is provided exclusively for consumers’ personal use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS.
Copyright 2020 MichRIC, LLC. All rights reserved.