If you’re in the market for a new home, even just casually looking, you’re in luck. Right now, interest rates are incredibly low, which means you might be able to afford more home than you think. In fact, rates just a few years ago were double what they are today – which is 3.75% for a 30-year fixed rate as of October 24th.
In other words, if you’re looking to purchase property in the next few months, it’s good to be you.
How Interest Rates Affect the Buying Process
You may not realize how much purchasing power you have right now with such low mortgage interest rates. These rates affect your monthly payment, so you could conceivably increase your
home price range without paying more if rates were higher.
Let’s look at an example:
A buyer who secures a 3.75% mortgage rate (today’s current interest rate) could have the same monthly payment on a $450,000 home as someone who locked in a rate of 4.75% would spend on a $400,000 home. The lower the interest rate you can secure, the more home you can afford.
Today’s buyers can afford more home for the same monthly payments. You can extend these numbers to larger, more expensive homes depending on your budget.
What You Can Do to Take Advantage of Low Rates
Use today’s low-interest rates to your advantage for opting for a fixed-rate mortgage, rather than a lower interest adjustable-rate mortgage. Though an adjustable-rate mortgage may save you money right now in the form of lower monthly payments, it might come back to haunt you in the future. If interest rates increase over the next few years, your rate on that mortgage will increase
right along with it.
That uncertainty makes long-term financial planning difficult. By going for a fixed-rate mortgage, you can lock in today’s lower interest rates for the entirety of your loan.
Don’t Miss Out on Historically-Low Interest Rates!
If you’re considering buying a new home, now’s the time to do it. You can go beyond your expected price range without paying higher monthly payments if you can lock in a number like today’s rate. The market might be cooling down as we head into November, but don’t let that stop you. Lower interest rates help home buyers like you get more bang for their buck.