Thinking about buying a home, but concerned about the slowly rising interest rates? It's best to be informed and understand how your mortgage payment is affected by an interest rate increase, which ultimately affects your buying power too. I think you'll find that the impact is minimal and it shouldn't prevent you from owning a home instead of renting. The benefits of owning a home, as described in an earlier post I shared, far outweigh renting.
Now, I'm not a lender, but I've consulted with a couple of lenders on this so I can accurately provide some specifics on this topic.
Technically, mortgage interest rates change in increments of 1/8th of a percentage point, or 0.125%. For every 1/8th of a point that rates go up, here's how much your payment would change.
In terms of a mortgage (after your down payment is applied)
• $200,000 mortgage, the payment would change by about $15 per month
• $300,000 mortgage, the payment would change by about $23 per month
• $400,000 mortgage, the payment would change by about $30 per month
• $500,000 mortgage, the payment would change by about $38 per month
Now, those increases aren't too bad. It is still well worth owning a home which gives you the opportunity to capitalize on our strong equity building market, tax write-offs, etc.
If you have any questions about this or about buying a home, please don't hesitate to reach out!
Deb Goetz, Realtor®, CRS, broker/owner of Denver Boulder Real Estate