Extra! Extra! Read all about it! Have you heard? Interest rates are on the rise. What does that mean for your home’s value? That is exactly what I wanted to discuss today.
The entity that sets interest rates, the Federal Reserve, meets on a quarterly basis. In 2016, they increased interest rates in two of their four meetings, including the one in December. They have predicted that this year they will raise rates in three out of the four meetings.
Let’s just say they go up 1% from 4.5% to 5.5%, which is what many experts are predicting. Logic says that is still an amazingly low rate, and based on 20- and 30-year trends, it is. However, here is what that increase means for you specifically if you’re trying to buy a home.
If you get approved today for up to $300,000 at 4.5%, just a 1% increase will greatly affect your buying power. With a 5.5% rate, you would only be able to afford a $270,000 home and your mortgage payment will end up about the same as it would have been with a $300,000 home at 4.5%.
If you’re trying to get the maximum amount of money possible out of your home sale, now might be a good time to consider putting your home on the market. There are a lot of buyers out there looking right now and the more potential eyeballs looking at your home, the better. On the flip side, if you plan on purchasing a new home in the near future, it is a good idea to take advantage of the money while it’s cheap and before rates go up.
If you have any questions for me or if you are looking to buy or sell a home in Charleston, don’t hesitate to give me a call or send me an email. I would love to hear from you and discuss your specific situation further.