If you are considering the purchase of home and you do not have the luxury of paying cash for a home, you most likely are considering a 30-year fixed mortgage. If you have not recently checked, you might be surprised to find that mortgage rates here in Colorado are now over 5%, as they are for most of the United States. Rates as of April 20th are hovering around 5.125%. This is up over 1.5% from rates of 3.5% at the end of January. What does this mean to your purchasing power?
A 1% increase in mortgage interest rates can have a decreasing effect on your purchasing power. Generally, it will decrease your purchase power by about 10.75%. What does this mean? If you were thinking about buying a home a month ago in the middle of March with rates around 4.16% and you were qualified to make a purchase up to $550,000, it means that at today’s rates of 5.125%, you would now only qualify for a purchase up to approximately $490,900. In this market it is a significant change in what is available to you to purchase, both in terms of number of available properties as well as location and condition. So don’t wait, make your plan today and let us get you settled into your next home.
