Your mortgage rate determines what house you can comfortably buy. And, there’s one huge reason why you should buy a home now. We’ll say that again: we think you should buy as soon as possible.
But isn’t it a good idea to watch the market and let it play out? Isn’t patience a virtue? What’s the rush? Why now?
Because interest rate are near a 3-year low - and will go up in 2017.
True, that’s not the end of the world. But if you’re hoping to add a much-needed bedroom, expand your square footage, or move into a nicer neighborhood, today’s interest rate is in your favor.
Your ability to borrow is based (in large part) on the mortgage interest rate. Basically, your income allows you a larger loan at a 3.875% rate than it does at a 4.275% rate. That’s because the size of your loan must stay below a 45% debt-to-income (DTI) ratio.
That .5% difference can mean tens of thousands of dollars less buying power.
Even though rising home prices affect what home you can afford, rising interest rates may end up changing your plans even more. Today’s mortgage rates are probably the tail end of a very favorable lending environment.
Well-known lender Freddie Mac has forecast a hike in mortgage rates to 4.0% in 2017.
That’s why, if you’re planning to buy, now’s the time to start the process. Talk to Jim Lea’s Team about which mortgage lender we recommend, and we can help you get into the home that’s just right for you.