Interest rates are on the rise

Interest rates are on the rise but how does it effect which home you buy?


Buying a home 12 months from now may cost more than expected and here’s why

Rising interest rates are more than a news headline, they dictate how much a home purchase will cost you now and in the future.  It can mean bigger monthly payments, decreasing purchasing power or maybe even being priced out of the area you want to live. Here are some graphics to show what a rise in interest rates could mean for you.  


Monthly Payment Increase

If you are looking for a house that cost $300,000 today, a 1% increase changes your monthly payment by $263.57/month.  That small increase works out to a total of $94,885.20 over a 30 year period.  That’s in-state tuition for two bachelor degrees at a state university.

Interest rates are on the rise


Home Affordability 

Naturally, increasing interest rates also change the amount of house you can afford to purchase. If your goal is to stay within a certain monthly payment, you can expect to look for lower priced homes to keep that payment the same.  In this graphic you see that for about the same monthly payment of $1400, your purchase price decreases by $30,000 when the interest rate increases by 1%.  This is a significant loss of purchasing power for a home buyer.

Interest rates are on the rise


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John Castelli, Realtor
Keller Williams Realty Partners
(773) 851-7636 Mobile 
JohnCastelli@kw.com

www.JohnCastelli.com

   

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