Predictions for 2016 (2nd Quarter)
- Fannie Mae Predicts 4.2%
- Freddie Mac Predicts 4.7%
- Mortgage Bankers Association Predicts 4.9%
- National Association of REALTORS® Predicts 5.3%
Let’s take a look at what even a small, .5% increase in the rate could do to the net worth of your family.
Today, on a $250,000 home, with an interest rate of 3.86%, your monthly payment (principal and interest only) would be $1,173.
The Home Price Expectation Survey projects home prices will rise approximately 4.4% in the next year. Â So in a year, the home above would cost $11,000 more and now be $261,000. Â If we add on top of that the mortgage rate increase projection of Freddie Mac (about an average of all the projections) at 4.7%, the monthly mortgage payment on the same home rises to $1,354.
That is an increase of $181 per month. Â And if you think that’s a big chunk of change, let’s multiply it over the course of a 30 year mortgage. Â Ready? Â You pay $65,160 more, just because you waited a year to buy.
What does this mean for you?
Well, it’s pretty obvious what it means for you as a buyer. Â Waiting is going to cost you quite a bit of money. Â It’s going to shrink your buying power and affordability. Â That means you will be able to afford more house now, than you will in a year from now (if your income level stays the same).
What does it mean for sellers? Â Well, what do sellers become after they sell? Â Buyers! Â So the same holds true for you. Â If you are waiting to sell your home because you think it will be worth more in a year, guess what, so will the house you will be eventually buying. Â Then add the higher interest rate on top of that.
So what this means for you is that there is no better time to buy and sell than right now. Â If you are interested in talking more about any of the information above or want to discuss buying a home, or selling a home in Farragut or Knoxville, as always, don’t hesitate to contact me, Troy Stavros with Gables & Gates, REALTORS. Â We’ll find a time that is convenient for you to sit down and discuss your plans and goals and how to best get them accomplished. Â I look forward to talking with you!