Cost vs. Price - What higher Interest Rates can do to your purchase power.

Cost vs. Price  - What higher Interest Rates can do to your purchase power.

A good rule of thumb is for every 1% increase of interest rate there is a 10% decrease in 

purchase power. It's surprising to most buyers. This new year is going to bring many new opportunities to find a home. If you are still possibly considering a purchase you may want

to know this very important particular bit of information.

The higher interest rates go, the less home you and your family will be able to afford, finance 

or purchase. If you were looking at property in the $500,000 range and interest rates were at 

4.23% now they will eventually steadily be going up to 5.23%, meaning that if you wanted to 

keep your mortgage payment the same you would only be able to purchase a $450,000 home. 

Even with a 1/2% change in interest rate it can effect your purchase power greatly. I 

recommend getting back into finding a house as soon as possible to get the most house 

for your dollar, before interest rates go up and property prices stay the same.

Please see this example to show your buying power depending on what interest rate you 

lock your loan in at.

As a buyer it's vital to know your market and what options you have. I'm here to guide 

you through the process. If you have any questions email me: edinburghhomes@gmail.com 

or give me a call at 423-366-0431