Rates Rising-How does this affect your purchasing power?
As most of you have seen interest rates are going up. What does this mean for you if you are looking to purchase a home? How does this affect your purchase price and qualifications?
On average the rates have went up about 1% (FHA, VA, Conventional), which means that your purchase power went down about 10%.
What does that mean?
It means that the purchase price you have been looking at, now will need to go down by 10% in order for you to be in the same monthly payment you where budgeting for. So if you were looking for a 200K home, now you would be wanting to look at $180K purchase price in order to have the same monthly payment unless you are able to qualify for the increased monthly payment. Now, this may not affect your ability to qualify for the same priced home as you want, but make sure you talk through with your lender.
“Clear as mud”?