Interest Rates on the Rise

You may have heard the rumors that the federal reserve may quit buying bonds. This seems to be a point of some speculation, but interest rates have begun to rise nonetheless and are not likely to go back down.

So, what does this mean for the real estate market?

For Buyers, this means that on a $100,000 loan the payment would go up $30.00 per month just for principal and interest for a total of $10,800 over a 30 year period.  On a $200,000 loan these numbers double.  Buyers should consider locking in their rates if they have not already done so.  There could be a cost to lock in which is dependent on the lender and length of the lock in.  Contact your real estate agent to discuss what this means and to get more information.

For Sellers, the impact is much greater.  It is possible some potential buyers may be lost because the payment has gone up.  If selling and purchasing a new home at the same time, consider dropping the asking price.  If the asking price is dropped by $3000 and then the new home is purchased, this would save approximately $18,600 because they would have gotten the locked in interest rate on the purchase of their new home. 

The statement "now is the time to buy" has never been more true.  Rates will most likely continue to rise and may never be below 4% again.  Contact your real estate agent today find out more about what this means for you and to discuss your options.