The experts have been predicting for several years now that rates were going to rise. . it’s finally happening. Gone (for now!) are the 3% mortgages. We have now inched up to 4.5%. Sound high? Historically, that’s still a great rate, but unfortunately predicted to rise. If you are thinking about buying, but want to wait until prices drop, you might want to think again! Interest rates have a huge impact on the affordability of your home.
The average home price in Chico is up over $300,000. If you were to get a low down payment (3.5% is the minimum) FHA loan, your mortgage (including taxes and insurance) would be approximately $2,047 per month. If interest rates bump up to 6%, your payment would be $2,315 per month and you would pay approximately $96K more in interest over the life of the loan.
Now for those of you who are really thinking about a step-up home, but think you need to wait until you can afford it, consider this scenario. .. If you were to purchase a $500,000 home with 10% down, your payment would be approximately $2,941. If interest rates rise to 6%, that same payment would increase by $371 per month, at total additional interest cost of $133,567.
If you have been thinking about getting into the market, or stepping up into a larger home, now might be the time. Give us a call, we’d love to help you make an informed decision!