Waiting to sell your home may not be the best choice! While many experts thought interest rates would be in the 5s by now, we are still seeing our clients lock in in the high 3s and low 4s. This is great news for buyers who have continued to search and just haven’t found the right property yet.
Of course, every buyer wants to get a good price for the home they select. However, unless our client is paying cash, the interest rate they pay is just as important as the price.
Our rule of thumb is simple. For every one percent change in interest rate, there is a corresponding 10% change in purchasing power.
See how a two percent increase in interest rate, changes purchasing power by 20%!
$500,000 Mortgage @ 4.5% = $2,533.
$400,000 Mortgage @ 6.5% = $2,528.
If you can afford a $500,000 mortgage today at 4.5%, you will only be able to afford a $400,000 mortgage if rates increase to 6.5%.
Seven Gables Real Estate