Interest Rates Expected To Rise: Is Now The Time To Buy?There has been a lot of talk about “rates” going up, but for those of us who aren’t familiar with the real estate industry that probably doesn’t mean very much. What these people are referring to are the interest rates being offered by major banks for mortgage loans (the way you get money to buy a home).
The Federal Reserve, aka “The Fed” (the government entity responsible for controlling interest rates), has added a line item to their docket for December 2015 which is going to very likely result in the rate at which you can borrow money to buy a house to go up.
How much you ask? No one knows, but experts are predicting somewhere between 1/16 to 1/4 of a point. This means if the interest rate before the hike was 4% then it would go up to somewhere between 4.0625 to 4.25%.
First- don’t panic. The increase is a nominal one and the impact on the public is more psychological than financial. To illustrate my point- if you wanted a $200,000 mortgage at 4% the monthly cost would be $955 per month. If the rates went up by the amounts above you’d be looking at a payment of $962-$984.
What does this mean? The reality is for most buyers a $7 to $29 increase in the monthly mortgage cost isn’t going to prohibit them from buying so there’s no reason to panic.
The reality is – whether the interest rate is 4 or 4.25%- it is a phenomenal time to buy now and at some point interest rates will continue to climb through next year which means it’s likely the rate you’ll get in the next 3-6 months is the best you’ll be able to get for the foreseeable future.
Often times, news is misintepreted by the general public and panic rather than logic prevails- instead arm yourself with the facts and make an informed decisions as an educated consumer!
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