The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to look at where rates are headed when deciding to buy now or wait until next year.
According to aÃ‚Â recent articleÃ‚Â inÃ‚Â Kiplinger, 30 year mortgage rates are about to increase:
Ã‚Â Ã¢â‚¬Å“Now around 4.1%, rates will edge slowly toward 4.4% by the end of this year. Then theyÃ¢â‚¬â„¢ll follow the Treasury bond rateÃ¢â‚¬â„¢s upward move in early 2015. Thirty-year home loans should end 2015 at around 5.1%, still low by historical standards.Ã¢â‚¬Â
Here is a graph created by using interest rate projections inÃ‚Â Freddie MacÃ¢â‚¬â„¢sÃ‚Â August 2014 U.S. Economic & Housing Market Outlook:
HOW WILL THIS IMPACT A MORTGAGE PAYMENT?
ResearchÃ‚Â released this month byÃ‚Â ZillowÃ‚Â reveals:
Ã¢â‚¬Å“We examined how a 1 percentage point rise in mortgage rates would impact monthly payments for the typical home in 35 metro areas, and found that the difference this year versus next year varies dramatically from market to market. In the San Jose/Silicon Valley area, for example, potential buyers should expect to see aÃ‚Â monthly payment increase of more than $700Ã‚Â if they waited a year to buy the same home they were considering today. By contrast, in St. Louis, the difference is onlyÃ‚Â $65 per month.Ã¢â‚¬ÂÃ‚Â (emphasis added)
Again, we turn to the Zillow research:
Ã¢â‚¬Å“As rates rise, new home buyers will confront higher financing costs and monthly mortgage payments. For many, this will mean tightening their budgets and sacrificing some luxuries they may take for granted today.Ã¢â‚¬Â
Ã‚Â Agents:Ã‚Â Would this chart help you put todayÃ¢â‚¬â„¢s interest rate environment in perspective when youÃ¢â‚¬â„¢re meeting with buyers? How about a few more showing rate projections and the impact this would have on your buyerÃ¢â‚¬â„¢s purchasing power?