Interest Rates Rising, Should You Worry?
Interest Rates Rising, Should You Worry?
A lot has been made in the news recently about imminently rising interest rates with some people literally hanging on every word that comes out of the FED. All the hype has some would be home buyers wondering if this simply a sales tactic used by real estate agents and mortgage brokers to create urgency or if rate increases will have a real impact on purchasing power. There are many, many different loan products out there and interest rate increases will impact each slightly differently but the chart below, which is calculated using a 30 year, fixed rate loan, shows the effect interest rate increases will have.
| Loan Amount | 4.5% Int Rate | 5% Int Rate | Difference | 5.5% Int Rate | Difference |
|
$250,000.00 |
$1,193.54 |
$1,342.05 |
$148.51 |
$1,419.47 |
$225.93 |
|
$350,000.00 |
$1,670.95 |
$1,878.88 |
$207.93 |
$1,987.26 |
$316.31 |
|
$450,000.00 |
$2,148.37 |
$2,415.70 |
$267.33 |
$2,555.05 |
$406.68 |
|
$550,000.00 |
$2,625.78 |
$2,952.52 |
$326.74 |
$3,122.84 |
$497.06 |
|
$650,000.00 |
$3,103.20 |
$3,489.34 |
$386.14 |
$3,690.63 |
$587.43 |
The chart above shows the effect of ½% and a full 1% increase in interest rates at loan amounts ranging from 250k – 650k. A rate increase of ½% increased monthly payments by $148.51 to $386.14. A full point increased monthly payments from $225.93 to $587.43. So you be the judge and decide if these monthly payment increases would influence your decision whether to buy now or buy later.
Frank L. DeFazio
[email protected]
http://www.CenterCityTeam.com
