Mortgage rates have been on the rise over the past week, ever since the federal reserve announced that it may back off of asset purchasing later this year. Although experts (according to this article) don’t think that will have an immediate negative impact on the housing market recovery, it does have an impact on the new home buyer. First time buyers and buyers on a tight budget are impacted the most.
Let’s consider this example:
You are Dana NewHomeBuyer and you fall in love with this townhouse listed at $300,000.
Assuming you pay $300,000 for it and put 20% down, you will be taking out a mortgage for $240,000.
Here are the different monthly payments at different interest rates:
With a 3.75% rate, your monthly payment is $1,111
With a 4.25% rate, your monthly payment is $1,180
With a 4.75% rate, your monthly payment is $1,251
Historically, the interest rates have been around 6%, at the historic average, your payment would be $1,438.
Just some food for thought…