Rising Mortgage Interest Rates

A quote from a Buyer:
"I thought we had more time at low interest rates so we have not rushed into anything, now we think we missed out."

Our conversation with a local lender while watching the Coke Zero 400 last night:
"Interest rates are now well over 5% and most likely will continue to increase" 

Our congratulations go out to Jimmie Johnson who not only managed to avoid the mess at the final few laps but also won the race!

Our concerns go out to the Buyers who wanted to buy but have not been pre-approved with a local lender yet and have not started looking for a home in person.   Internet searching is fun but it is not the same as seeing properties in person; that will be discussed in another post.

If a Buyer's price range a few months ago was a loan amount of up to $250,000 they now will have to settle for less due to the increase in interest rates. 

Here is an example:

$250,000 @ 4% = $1,195 monthly mortgage pmt (not including taxes, insurances & HOA fees)
$250,000 @ 5% = $1,342 monthly mortgage pmt (not including taxes, insurances & HOA fees)

If that Buyer qualified for mortgage payment of not more than $1,200 per month then they would need to finance less due to the 1% higher interest rate:

$234,500 @ 5% = $1,199 monthly mortgage pmt (not including taxes, insurances & HOA fees)

With low inventory in our area prices are not going down.  Sellers are choosy when accepting an offer and they are leery about accepting an offer where the Buyer can barely afford the property.
A Buyer may need to look for a property that is a little lower than their pre-approved price so that there is some wiggle room available in case issues arise during the inspections, the appraisal or loan approval process. 

If you are serious about buying a home then you should get pre-approved and speak to a local lender as soon as possible.  The sooner you can lock in an interest rate the better off you will be.  If you are looking for a Realtor that can help you find a home and a lender contact The Senecal Team. 

You can also visit our website  www.homesofftmyers.com and search for property, check for area information or fill out the contact form and we will be happy to assist you with your search.