Why should you care about lower interest rates?

We all have financed "things" before. Personally, I don't really split hair when it comes to interest rates when buying a furniture or a car. BUT when you are buying a several hundred thousand dollar home which you will be paying for for the next 30 years, then IT IS IMPORTANT.  That is why taking advantage of low interest rates is important to a buyer. If you are thinking of buying a home, read below. Low interest rate can mean you buying a specific home where higher rate can mean you no longer can afford it. THAT SIMPLE.

Low Interest Rates Have a High Impact on Your Purchasing Power

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.92%, which is still near record lows in comparison to recent history!

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money.