Two things can happen when the mortgage rates go up before you’ve found a home or locked-in your mortgage. You’ll either pay the current mortgage rate which means a higher payment, or you’ll have to increase your down payment to keep the monthly payment at the same level.
If the rate were to go up by ½%, the payment on a $275,000 mortgage would increase by $82.87 per month for the entire 30-year term. That would increase the cost of the home by $29,835.
Some people are purchasing the maximum home that they can qualify for. In that case, they cannot qualify for a higher payment and the only way to buy the same price home is to put more money down which may not be a possibility. The other alternative is to buy a lower price home which may not be in the same area or size which will involve some compromises.
The rate is not the only dynamic that affects buyers waiting to purchase. The home they want could sell to someone else. Prices could increase as new homes come on the market. The question that many buyers ask themselves when they become a victim of the consequences of delay is “What could we have spent the money on if we didn’t have to make a higher payment?”
Mortgage rates are very attractive currently and within ½% of the all time low of 3.35% in December 2012. The highest rate was 18.45% in October 1981. Whether you’re purchasing or refinancing, it may not be this low again.
To see how it will affect the payment, plug your numbers into this Cost of Waiting to Buy calculator or call me at (859) 312-7599 and I’ll help you with it.
Published by Trey McCallie
Trey McCallie is the Principal Broker for Realty One Group Bluegrass. Trey sells residential real estate in Central Kentucky and is responsible for recruiting, mentoring, and training agents. He has 17 years of experience in Real Estate and 25 years total in sales and marketing.
Before real estate, Trey sold data storage and management solutions to Fortune 1000 and mid-market organizations representing companies such as Oracle, Sun, EMC, and HP.
Trey is a native of Roanoke, VA where he lived for 22 years.
Trey began his career in Real Estate with Napier Realtors ERA in the West End of Richmond, VA. In 2007, Trey sold 30 homes and produced $6.15 million in volume, earning national recognition from ERA.
In 2008, Trey was hired as the Managing Broker of Long & Foster’s Blacksburg, VA office. Long & Foster is the largest privately held real estate company in the U.S., with 220 offices in the Mid-Atlantic. In Blacksburg, he managed 35 agents and 2 staff. While at Long & Foster, he was named to the Executive’s Club and drew rave reviews from the agents he mentored.
Trey is an avid college football fan, following the Virginia Tech Hokies since he was young. He has traveled to many of the ACC stadiums and will now start marking some SEC stadiums off his list.
Trey also enjoys golf, serving his community, concerts, and movies. Trey has been a Rotarian since 2003, serving as Sergeant at Arms and Director of Membership; he recently joined the Rotary Club of Lexington.
Trey is married to DeeDee Robinson. DeeDee is the Enterprise Administrator for Capacity Command at UK Healthcare. DeeDee has encouraged Trey to follow the Cats as well as the Hokies so he is adding many BLUE items to his wardrobe. Trey and DeeDee have a daughter, Harper Lawson, born in July 2012 and son, Spencer, born in June 2014.
Trey is a graduate of Randolph-Macon College in Ashland, VA where he remains involved as a member of the Board of Associates and Presidents Society Executive Committee.
Trey is also a member of the Pi Kappa Alpha Fraternity and is an alumni advisor to the Kappa Chapter at Transylvania University.
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