Tuesday, July 9, 2013

INTEREST RATES ARE ON THE RISE, IT'S TIME TO BUY!

The Federal Reserve suggested last week that they will over time loosen the constraints that have had in place for the last several years, allowing interest rates to increase.  With today’s improving real estate market and strong consumer confidence will the increase have a negative impact on home buyers?
I believe that in the near future the rise will create a driving urgency to buy.  Consumers recognize that recent interest rates are very favorable and the cost of homeownership is at a record low.  Consumers trying to time the market may now decide that it is time to move forward. 
Consider this; a buyer qualifying for a $750 monthly payment, at 3.5% (30 year fixed) can purchase a $165,000 home. However if the rate increases to 4.5% they same buyer will only be eligible to purchase a $148,000 home and at 5.5% the buying power diminishes by 20% to $132,000.
Although home prices are increasing, in most areas home prices remain significantly lower than 3 years ago.  With mortgage rates predicted to raise this is not the time to take a wait and see approach to home buying. It’s time for action.

Terry Roberts
Broker
RE/MAX Landmark
Terrell, Texas
www.rmlandmark.com