If you saw my video earlier in the year, I gave a prediction that interest rates were going to start increasing. That has started to happen. Since the first of the year, we’ve seen a 0.5% increase. I wanted to break that down for you and what it means to you as a buyer or a seller.
Let’s say you were to buy a home at $300,000 and do a conventional loan with 20% down. The interest rate that you’d be paying on that loan today would be around 4.625%. The loan amount would be $240,000 and the monthly payment would be $1,234.
Now let’s say that you decide to hold off for whatever reason and you decided to purchase something or sell something at this time next year.
Over the next 365 days, there is likely to be a continuation of appreciation from a value standpoint. With an average appreciation of 5%, that $300,000 home will be worth roughly $315,000 next year. Your interest rate next year would likely be around 5.25%. The loan amount would be $252,000 and your monthly payment would go up by $157 per month to $1,391. Over the life of the loan, the home purchased next year would end up costing $56,520 more than it would if you bought it right now.
If you decide to buy now, you’re giving yourself a lot more buying power. That will open up your spectrum to find a larger and better home. If you decide to sell your home, now is also a great time. With interest rates still being lower than usual, it’s going to open up the opportunity for more buyers to qualify your home.
Right now, we are in a seller’s market for any home listed up to $275,000. We’re seeing multiple offers and very quick sales. Homes priced above $275,000 have a little more inventory, but it’s still a very good and strong market.
If you have any questions about the market or if you’re thinking of buying or selling a home, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.