Posts Tagged ‘Interest rate’

How much should interest rates matter to Seattle home buyers?

13th January
2009
written by robgraham

Seattle Home Buying Tips The short answer is a lot.  The following chart shows how much purchasing power you loose with each half a point rise in interest rate.  Each line represents what you can afford if you keep your monthly payment the same and only increase the interest rate on your home loan.  The numbers are pretty powerful.

 

5.0% 5.5% 6.0% 6.5% 7.0%
200 189.154 179,134 169,918 161,430
300 283,556 268,534 254,719 241,995
444 378,133 358,110 339,678 322,710
500 427,710 447,668 424,637 403,425
600 567,112 537,068 509,438 483,990
700 661,821 626,761 594,516 564,818

A rise of 1.0% from 5% to 6% represents 10% less home you can afford.

Considering interest rates have come down dramatically this year and home prices have also fallen, now represents a great time to buy.

As of this writing, the average interest rate for a 30 year fixed loan is 4.75%

Also, keep in mind that if you look at historic trends, interest rates fall gradually over time but they tend to go back up fairly dramatically.

RELATED TOPIC:

Best Financing Options for Seattle First Time Home Buyers: FHA Loans

 

 

Let me know if you need help.

Rob Graham, Accredited Buyer’s Representative

Windermere Real Estate

206-321-6349

robgraham@windermere.com

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