Are you considering purchasing a home but unsure about how rising interest rates might impact your monthly mortgage payments? Look no further!
There are many things to consider to know if this is a good time to purchase or not, but let's look at this example if you're predicting a drop in prices:
Let's say you're interested in buying a $300,000 home. At a 6% interest rate, your monthly mortgage payment would be around $1,798.
It's important to remember that interest rates are still relatively low compared to past decades. Plus, a higher interest rate could actually bring more motivated buyers to the market, potentially leading to more competition for your dream home...so let's take a look at if prices were to decline by 10% but the rates go up by 1%:
Let's say you're interested in buying the same home but at $270,000 (a 10% decrease from the original $300,000 price). At a 7% interest rate, your monthly mortgage payment would be around $1,799. That's only a $1 difference compared to the original $300,000 home at a 6% interest rate.
It's worth noting that rising interest rates often coincide with an increase in inventory, as some potential buyers may decide to hold off on purchasing a home, but those in the market will be showing high motivation. This can lead to less competition in the market and potentially more negotiation power for buyers, all depending on the home in question.
So, what does all this mean for you as a potential homebuyer? It's important to weigh the pros and cons and consider what works best for your budget and financial goals. Don't let rising interest rates deter you from entering the real estate market, as there are still plenty of opportunities out there for potential buyers. Happy house hunting!