There are a lot of factors involved in figuring out when the right time to buy your new home may be. One of the biggest, that sometimes gets the least attention, is current mortgage rates.
Mortgage rates have been at historic lows for quite awhile now, dipping down to 3.35% for a 30 year fixed mortgage in 2012 (compare that to 17.5% in 1982 and today’s rates seem like free money). Since 2012 mortgage rates have fluctuated through the 3-4% range, with a slow but noticeable rise beginning in 2017. Rates have stayed above 4.1% since the end of 2017 and coming into 2018 they have reached 4.38% Throughout 2018 mortgage rates are expected to continue their slow increase.
(Check out Freddie Mac’s 30 Year Fixed-Rate History to see the fluctuation of rates dating back to 1971)
It’s pretty common knowledge that higher rates equal higher payments, but what does that really look like?
…at 4.17% a home buyer purchasing a home for $304,500, with 20% down, would have a monthly payment of $1,187, versus a payment of $1,070 at a rate of 3.32%. That equates to a $117 payment increase for only .85% difference in the rate, and totals $3,510 over 30 years.
When planning to purchase, this is something you definitely need to consider. Stay tuned in with current rates and future predictions. Check with you lender and Realtor to see their thoughts on what is going to be the best for you. Even small changes in rates make a big difference on how much you will save or spend.
For a quick way to deteremine monthly payments at differnt rates, check out this tool provided by Rebecca Stiles-Bergquist of Waterstone Mortgage → The Potential Cost of Waiting to Buy