It is important to understand the relationship between mortgage rate and your purchasing ability if you are looking to purchase a home. Your purchasing power is the ability to afford a home that you are able to purchase. The monthly payment you pay on your home will directly affect the mortgage rates. Rates rise and so will the monthly payment that you can lock in on your home loan. This could impact your purchasing power in the future, especially in a rising rate environment such as we are currently experiencing.
The average 30-year fixed mortgage rate today is higher than 5%. Experts predict that this will rise in the coming months. If you act now, you can get ahead of this increase in your purchasing power.
If you get a smaller home loan amount, your chances of exceeding your target payment range increase. You can use this motivation to buy a house now if you are ready to do so.
When searching for a house, it is important to remember your budget. Consider what might happen if rates go up by getting preapproved. . . You should know what this would mean for your monthly expenses and how comfortable that makes you feel. This will help you to adapt if rates go up.
It doesn’t matter what, it is best to collaborate with your real-estate advisor and trusted lender to develop a plan which takes rising mortgage rates into account. You can both look at your budget and compare it to current rates, and create a strategy that you are ready for changes.
Even small increases in mortgage rates could have a significant impact on your purchasing power. It’s important to have a solid plan if you are in the process of purchasing a home. To help you achieve your homeownership dream, partner with a trusted lender and real estate advisor.