Home Mortgage Rates - Time to Lock and Load?

Posted by Phil Boren on Thursday, April 19th, 2018 at 1:44pm.

Home mortgage rates have been on the rise recently, and many prospective home owners are asking the question ... "What does this mean for us?" Actually, a rising-rate environment affects both buyers and sellers, but for everybody in the market it can create some confusion and even worse - indecision and burnout! Having been a Realtor® for over 30 years now, I've seen this many time in the past, and it's always important to understand the dynamics of any market before making a decision. When interest rates do rise, many times the market segment that is most impacted can be the lower or entry-level. As some home buyers stretch to qualify to buy their first home, for example, a rise in mortgage rates can throw their mortgage loan ratios out of whack and the result is ... they can no longer buy that house and stick to a payment amount without putting more money down. Frustrating.

Thanks to our preferred local lender, Jeff Silver at Big Valley Mortgage, you can see from the chart to the left that rising rates can have an effect on the numbers. In this hypothetical scenario, the prospective home buyer would be trying to keep the PI amount to $1,500/month with 20% down on a 30-year mortgage, and you can see what happens to the purchase price, for example, when home mortgage rates go up just 1% from 4.5% to 5.5%. The bottom line is, something has to give ... so if the monthly payment is a critical point, then ultimately the buyer's purchasing power is impacted unless they're able to put more money down. If the market is competitive and the home price is not moving, then the prospective buyer might have a higher monthly payment as a result.

So what's the most important takeaway in our current rising-rate environment? There's an old saying in real estate: Don't wait to buy, buy and wait. This is a good axiom to remember in our current environment, so it may be time to lock and load when it comes to home mortgage rates. As Jeff's chart points out, now may be a good time to lock your rate and seal the deal.

If you've been considering buying a home, call/text me at 1-916-960-8895 and we'll work with you to get it done.

(C) Copyright 2014 - 2018, Phil Boren. All Rights Reserved. 

Phil Boren
Call/Text: 1-916-960-8895
Search NorCal Homes For Sale Here
License #: 01351451

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