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How Today’s Mortgage Rates Impact Your Home Purchase

May 9, 2022 By Tami Savage

How Today’s Mortgage Rates Impact Your Home Purchase

If you’re planning to buy a home, it’s critical to understand the relationship between mortgage rates and your purchasing power. Purchasing power is the amount of home you can afford to buy that’s within your financial reach. Mortgage rates directly impact the monthly payment you’ll have on the home you purchase. So, when rates rise, so does the monthly payment you’re able to lock in on your home loan. In a rising-rate environment like we’re in today, that could limit your future purchasing power.

Today, the average 30-year fixed mortgage rate is above 5%, and in the near term, experts say that’ll likely go up in the months ahead. You have the opportunity to get ahead of that increase if you buy now before that impacts your purchasing power.

Mortgage Rates Play a Large Role in Your Home Search

The chart below can help you understand the general relationship between mortgage rates and a typical monthly mortgage payment within a range of loan amounts. Let’s say your budget allows for a monthly mortgage payment in the $2,100-$2,200 range. The green in the chart indicates a payment within that range, while the red is a payment that exceeds it (see chart below):

Buyer's Purchasing Power (Monthly Mortgage Payment Principal and Interest)

As the chart shows, you’re more likely to exceed your target payment range as mortgage rates increase unless you pursue a lower home loan amount. If you’re ready to buy a home, use this as your motivation to purchase now so you can get ahead of rising rates before you have to make the decision to decrease what you borrow in order to stay comfortably within your budget.

Work with Trusted Advisors To Know Your Budget and Make a Plan

It’s critical to keep your budget top of mind as you’re searching for a home. Danielle Hale, Chief Economist at realtor.com, puts it best, advising that buyers should:

“Get preapproved with where rates are today, but also consider what would happen if rates were to go up, say another quarter of a point, . . . Know what that would do to your monthly costs and how comfortable you are with that, so that if rates do move higher, you already know how you need to adjust in response.”

No matter what, the best strategy is to work with your real estate advisor and a trusted lender to create a plan that takes rising mortgage rates into consideration. Together, you can look at your budget based on where rates are today and craft a strategy so you’re ready to adjust as rates change.

Bottom Line

Even small increases in mortgage rates can impact your purchasing power. If you’re in the process of buying a home, it’s more important than ever to have a strong plan. Let’s connect so you have a trusted real estate advisor and a lender on your side who can help you strategize to achieve your dream of homeownership this season.

Tagged With: First Time Home Buyers, For Buyers, Interest Rates, Move-Up Buyers, Pricing

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I help homeowners sell their existing home and shift into a home more suitable to their needs in the North Metro Atlanta area (specifically around Cumming, Canton, & Milton). Read More…

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If you're thinking of buying or selling a home this year, it's important to know where the market is headed and what that means for you. Let's connect so you have the latest expert insights to help plan your next move.

SOURCES: 
• https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/mortgage-finance-forecast-apr-2022.pdf
https://cdn.nar.realtor/sites/default/files/documents/forecast-q2-2022-us-economic-outlook-04-27-2022.pdf
• https://www.fanniemae.com/media/43346/display
• https://www.freddiemac.com/research/forecast/20220418-quarterly-forecast-purchase-market-will-remain-solid-even-mortgage-rates-rise
• https://pulsenomics.com/surveys/#home-price-expectations
• https://www.corelogic.com/intelligence/u-s-home-price-insights/
• https://www.zelmanassociates.com/
• https://www.marketwatch.com/story/the-pandemic-boom-in-home-sales-is-over-mortgage-rates-soar-to-highest-level-since-2009-as-the-fed-pressures-the-housing-market-11651760108
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https://blog.firstam.com/economics/why-the-2022-housing-market-is-very-2019
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SOURCES: 
https://www.bankrate.com/mortgages/march-2022-mortgage-rate-outlook/
https://www.washingtonpost.com/business/2022/04/14/mortgage-rates-soar-their-highest-levels-11-years/
https://www.washingtonpost.com/business/2022/04/14/mortgage-rates-soar-their-highest-levels-11-years/ https://www.builderonline.com/data-analysis/mortgage-rates-continue-climbing-while-applications-decrease-in-latest-weekly-surveys_o
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Watch this video for a few to-do’s we recommend as you prep your home for sale.
 
But don’t stop there! Check out our new blog post to get a full checklist for prepping your home for sale!

https://tamisavage.com/sellers-checklist-a-timeline-to-prep-your-home-for-sale/

_______________________________________________________________

❤️ Did you enjoy this video?  Please 𝐋𝐈𝐊𝐄 & 𝐒𝐇𝐀𝐑𝐄 the love. ❤️ 

I’m a full-time Realtor® in Cumming, Georgia.  We just moved back to Georgia at the end of 2021 when we bought a beautiful home in The Legends of Settendown Creek (an equestrian community).  We had lived down in Fayette County (GA) for 19 years while raising our 3 sons.  We have 3 border collies who have a ton of energy whom I adore!  (Besides they listen better than my sons did! LOL!)

B L O G ➳ www.TamiSavage.com/blog
F A C E B O O K ➳ https://www.facebook.com/TamiSavageRealtor/
I N S T A G R A M ➳ https://www.instagram.com/tamisavagerealtor/
P I N T E R E S T ➳ https://www.pinterest.com/tamisavage/cumming-surrounding-area-real-estate-resource/

I serve buyers and sellers in the Cumming, Canton, Milton & surrounding areas.

If you want to talk with me about North Atlanta real estate, please contact me: 
📧 tami@tamisavage.com
📱  770-744-2524 (cell) or 
📞 888-959-9461 x2543 (office)
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Make your home appealing to potential buyers with these 3 simple design tips.

🎨 Give your interior a fresh coat of paint. Remember that neutrals are best for selling.
🌳 Update your landscaping. This gives buyers a great first impression.
🛏️ Stage your furniture. Data show that staged homes sell faster and for more money.

While these three steps are helpful, there are likely a few more things you can do to maximize your property’s sales potential.

Contact me for a free, customized assessment of your home!
📱  770-744-2524 (cell) or 
📞 888-959-9461 x2543 (office)
📧 tami@tamisavage.com

_______________________________________________________________

❤️ Did you enjoy this video?  Please 𝐋𝐈𝐊𝐄 & 𝐒𝐇𝐀𝐑𝐄 the love. ❤️ 

I’m a full-time Realtor® in Cumming, Georgia.  We just moved back to Georgia at the end of 2021 when we bought a beautiful home in The Legends of Settendown Creek (an equestrian community).  We had lived down in Fayette County (GA) for 19 years while raising our 3 sons.  We have 3 border collies who have a ton of energy whom I adore!  (Besides they listen better than my sons did! LOL!)

B L O G ➳ www.TamiSavage.com/blog
F A C E B O O K ➳ https://www.facebook.com/TamiSavageRealtor/
I N S T A G R A M ➳ https://www.instagram.com/tamisavagerealtor/
P I N T E R E S T ➳ https://www.pinterest.com/tamisavage/cumming-surrounding-area-real-estate-resource/

I serve buyers and sellers in the Cumming, Canton, Milton & surrounding areas.

If you want to talk with me about North Atlanta real estate, please contact me: 
📧 tami@tamisavage.com
📱  770-744-2524 (cell) or 
📞 888-959-9461 x2543 (office)
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