What is the impact of interest rates on buying a house in Atlanta

The list price and down payment are the most important financial considerations when buying a house. These are not the only expenses.
You must keep an eye on many other numbers once your mortgage is closed. Your mortgage interest rate is the most important number to consider and how it can impact your finances. Find out what interest rates are important when buying a house in Atlanta.

Why Interest Rates Matter

Your mortgage interest rate directly impacts your monthly mortgage payment and the amount you end up paying for your home. Let’s take a look at why and how interest rates affect buying a house in Atlanta.Let’s say, for instance, that you started your home search when interest rates were at 4%. A one-bedroom condo was available for sale at $100,000. Your monthly mortgage payment for 30 years was $80,000. You would have to pay this amount after paying 20% down and closing costs. Your monthly payment would be $382.

However, if you wait for interest rates to drop, higher prices could offset the savings. $120,000 is the cost of a condo in the area you desire. A 20% down payment and closing costs are required to secure a mortgage amount of $96,000. $355 This is your monthly payment for a 30-year mortgage. Your monthly payment fell by [only] $27.”

Interest rates are important for those buying a house because they affect more than the interest you pay over the loan’s life. The fixed-rate plays an important role in determining your “home buying power” – the amount of home you can afford.

How Interest Rates Affect Your Buying Power

Let’s now see how interest rates affect your purchasing power when you buy a house in Atlanta.

In August and September 2019, interest rates fell to historic lows. September’s interest rate low was 3.5% for a 30-year fixed-rate mortgage. It would be possible to purchase a home worth more than $400,000 at that rate and only pay $1,500 monthly (not including taxes or insurance). The same monthly payment could have secured you a home worth less than $375,000 if rates were higher than 4.6% a year ago.

According to experts in the industry, each 0.1255% increase or decrease in mortgage rates can affect your purchasing power. With interest rates still low but rising, experts say now is the right time to purchase before they go higher. For advice on local markets and the best times to buy, you can contact an Atlanta agent by 678-337-1165.

An Example for Buying a House

Let’s focus on an example to show how interest rates affect the purchase of a house.

A mere 1% decrease in interest rates can save you $30,000. A 1% drop in interest rates could save you $30,000. Take this example

Steve, a home buyer, has a monthly income of $5,000 and expects to have $2250 in monthly debt. His ratio of income to debt is 45%. Steve obtains a fixed-rate loan of $250,000. His monthly payment includes principal, interest, and taxes at 4%. It would cost $1,193

What if Steve could get a 3.5% mortgage interest rate instead?

“A rate drop of half percent increases Steve’s purchasing power by $15,000, assuming $1,122 is his maximum monthly payment. . . Steve’s monthly payment would be lowered to $1,051 if his rate were 3%. This would increase his purchasing power by $30,000.

What It All Means

Interest rates directly impact your monthly mortgage payment for buying a house. Did you know that most of your mortgage payment will go towards interest only and very little towards the principal in the early years?

In a 30-year mortgage, 95% of the buyer’s monthly payments go toward interest. The interest required to pay is lower the higher the mortgage rate. The monthly payment is lower, making the home more affordable.

Let’s boil it down: “[I]f your monthly income is sufficient to afford a specific monthly payment, then you can take out a larger loan if the interest rates are lower.”

The Final Step Toward Buying a House 

Anyone buying a home should be aware of interest rates. Unfortunately, interest rates have risen from their historic lows just a few months ago. This means that it is more important to find the right home price. A local expert will help you find the right house price for your financial situation. If you are interested in buying a house at Atlanta, please contact us today at 678-337-1165.

from Blog – Fresh Start Home Sales https://www.freshstarthomesales.com/interest-rates-matter-buying-a-house-atlanta/
via https://www.freshstarthomesales.com