You’ve probably heard a lot of talk recently about rising interest rates. In just the last couple of weeks, the Federal Reserve raised rates again for the fourth time in a 12-month period.
Why does this matter? Well, interest rates impact affordability. The higher a buyer’s interest rate, the more their monthly mortgage payments will be. Here in Northwest Arkansas, the average monthly payment for a $230,000 home is now $40 higher. This may not sound like much, but $40 every month for 30 years equals out to a grand total of $14,000 in extra interest.
In other words, those looking to purchase a home should do so before rates rise again—which is expected to happen in 2019. Sellers, too, will want to act quickly if they plan to buy another home after their own sale goes through.
With all of this in mind, it’s important to realize that rates are still historically low. When I bought my first home, I did so at a rate of 6%. I thought I had gotten the best deal ever. Now, a 6% interest rate would leave some buyers in a panic.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.