Interest rates are climbing. What are you willing to give up to pay for those higher interest rates?
Remember, for every dollar you pay in higher interest rates is a dollar you take from somewhere else in your family’s budget. Stick around a minute. Let me show you how much you could lose by waiting on the market.
Hello everyone, Steve Huhta here from CENTURY 21 Union and HousesInSouthBay.com Now, like and subscribe. And it really helps the algorithm and really lets me know what content I should be producing for you.
So right now at the end of April 2022, interest on a 30-year mortgage is right around 5%. But just for some context, back in January, interest was a little less than 3.25%. This was the largest interest rate jump in the last 10 years. And it’s predicted that interest rates will continue to rise this year possibly up to 6% or more. So what does this mean for you? Well, if today you bought a million-dollar house, which is about the median price here in the South Bay, it would cost you about $5,420 a month principle and interest. But if you wait and interest rates go up to 6%, your payments on that same home will go up to $6,054. An increase of over $600 a month or $7,500 a year.
Now, I don’t know about you, but I would rather pay less in interest on my home and take an extra $7,500 a year vacation or invest in other assets than I would throwing that money away on interest payments.
So what if you do wanna wait and interest rates go up, but you don’t have that extra $600 a month? Well, then you need to buy a cheaper house to get the same payment.
Now, we see at $5,449, about $20 more a month, you could only afford a $900,000 home at 6% interest rate. That’s $100,000 less in value. So you just lost 10% purchasing power for a 1% interest rate. Now, I don’t know about you, but I put a lot of immediate action and effort into not losing that much money for my family. Now, so talk to your family financial planner and set some goals. Or if you think you’re ready to buy a home now, we can go over all the numbers together and see if it’s a good plan for you.
Bye for now and take care of each other.