Get off the fence...
Interest rates are in a “sweet spot” right now according to Karen Elliott with Summit Mortgage. “Rates have trended down and are positioned to move lower next week. Currently we are at 4.75% with no points on a conventional loan.”
What does that mean to a buyer? A lower interest rate helps a buyer qualify for a mortgage because it makes the principle and interest (PI) portion of the payment smaller. It can also assist in qualifying for a larger mortgage for the same reason. For example, a $200,000 mortgage with an interest rate of 4.75% would have a PI payment of $1,043 while the payment at an interest rate of 5.75% would increase to $1,167. If you are qualified for the lower payment of $1,043 and rates increase to 5.75% the mortgage would need to decrease to approximately $178,500 to keep the PI the same.
Summary
Lower interest rates = lower mortgage payment and /or more house
Higher interest rates= higher mortgage payment and / or less house
What does that mean to a buyer? A lower interest rate helps a buyer qualify for a mortgage because it makes the principle and interest (PI) portion of the payment smaller. It can also assist in qualifying for a larger mortgage for the same reason. For example, a $200,000 mortgage with an interest rate of 4.75% would have a PI payment of $1,043 while the payment at an interest rate of 5.75% would increase to $1,167. If you are qualified for the lower payment of $1,043 and rates increase to 5.75% the mortgage would need to decrease to approximately $178,500 to keep the PI the same.
Summary
Lower interest rates = lower mortgage payment and /or more house
Higher interest rates= higher mortgage payment and / or less house
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Thanks so much for your comment! I'll be back with you shortly. Cristina