Tag Archives: Rate

Payments Based on Interest Rates

Payments Based on Interest Rates

Lately there has been much speculation based on interest rates and home prices. The questions being how low will interest rates go and will home prices keep appreciating? More importantly will a jump in interest rates cause home prices to drop?!

This chart shows that a modest 1% jump in interest rates could reduce a buyers purchasing power by almost 10%.

To put those numbers into reality lets look at the following example. A mortgage payment on a $400,000 loan at 4.0% today costs $1910 per month. If that same home buyer wanted to keep their budget similar and rates rose to 5.0% they would be looking closer to a $360,000 purchase price.

No one knows what the future holds but if it makes sense for you to buy today we would be glad to speak in more detail!

The Wise Team