The 2 Big Questions about Real Estate
Mortgage Rates and Housing Prices
The two most frequently quoted constants in life are death and taxes. Two more things would-be homeowners wonder about (and should expect in the near future) are increases in mortgage rates and housing prices.
Rates Have Been Artificially Low
Interest rates have been kept artificially low for several years by the Federal Reserve in an effort to strengthen the economy. Policy is shifting to allow them to seek their own natural level, which will surely result in higher mortgage rates.
Rates on 30 year fixed mortgages are up over 1% from January, 2013.
3 Factors Affecting Home Prices
- Foreclosure activity is down
- New home starts are up
- Prices have been increasing in most markets for two years
Most experts agree that the cost of housing is going up.
If the price were to go up by 2% and the mortgage rate by 1% while a buyer is “sitting on the fence” making a decision, the payment would go up by almost $175.00 – each and every month for the term of the mortgage.
Even if a person can afford to make the higher payments, what could they have done with that extra $175.00 every month? Buy furniture? Car payment? Principal reduction? Retirement contribution? Save for a rainy day?
Click here to determine what the cost of waiting to buy will be, using your home price figures.