What Lower Mortgage Interest Rates Mean for Your Buying Power
If you want to buy a home, you should understand how mortgage rates affect how much you can afford and how much you will pay each month. Fortunately, rates for 30-year fixed mortgages have come down significantly since the end of October and are currently under 7%, according to Freddie Mac (see graph below):
“The rate cool-off somewhat eases the housing affordability squeeze.”
And according to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the Mortgage Bankers Association (MBA):
“MBA expects that affordability conditions will continue to improve as mortgage rates decline . . .”
Here's some more information about how this could help you with your home-buying plans.
How Mortgage Rates Affect Your Search for a Home
Understanding the relationship between mortgage rates and your monthly home payment is critical if you want to become a homeowner. The chart below illustrates how your ability to afford a home changes when mortgage rates shift. Imagine your budget allows for a monthly payment between $2,400 and $2,500. The green part in the chart shows payments in that range or lower (see chart below):
As you can see, even minor changes in interest rates can have a significant impact on your budget and the loan amount you can afford.
Get Help from Reliable Experts To Understand Your Budget and Plan Ahead
When looking to buy a home, it is critical to seek advice from a local real estate agent and a reputable lender. They can help you explore different mortgage options, understand what makes mortgage rates go up or down, and how those changes impact you.
By looking at the numbers and the latest data together and then adjusting your strategy based on today's rates, you'll be better prepared and ready to buy a home.