Buyers – if you have been riding the fence on your decision to pull the trigger on a home purchase, it’s time to get off the fence and get on your horse!
Interest rates for your home loan play a huge role in affordability.
Before June of this year, we enjoyed rates lower than 4%. Now, with the economy improving the Fed is considering changing policy to reduce the stimulus that keeps interest rates artificially low. Once that news hit the stock market and bond market, interest rates climbed steadily through the last month and are pretty much settling in at 4.5% – 4.875%. If the stimulus is scaled back, interest rates could rise even further to a more historical number say 6% – 6.5%. What does this mean in terms of affordability.
Follow this scenario: Say a lender determines that you have sufficient income to manage a $2,000/month mortgage. Great! What does that buy? At 4.5%, you could purchase a home very close to $400,000. At 6.5% you are looking at a $300,000 home. Your purchasing power just went out the window!
Current value is climbing in the Phoenix metro area, but not enough to price you out of the market. Interest rates on the other hand could price you out of your dream home if you wait to long. Get on your horse! Your first step is to call me.