Monday, February 11, 2013

How are you affected by rising interest rates?

This is a major concern to most of my clients.  Interest rates have a direct effect on the amount of money you will qualify to borrow.  As rates go up - your housing affordability goes DOWN

The chart below makes the following assumptions:
Salary of $75,000 per year
No other debts 
Property taxes of $4,500 per year
Hazard insurance of $900 per year
No homeowner's association fees

At 3% this person could theoretically qualify for a mortgage of around $430,000.  At 8% the very same person would only qualify for $247,000.  

We have all become very used to these unusually low interest rates - but it was not all that long ago when we were all excited to be below 6%.  The average interest rate in 2008 was 6.5%, in 2009 rates dropped into the 5%'s, 2010 saw rates dip into the 4%'s, and 2011 remarkably brought us the lowest rates since WWII.  

I remember 1997 and my first mortgage at 8.625%.  

Mortgage rates are being kept artificially low by our Federal Government - but even the powerful United States Government cannot stave off inflation forever.  We will see rates at 8% again, the question is ... What will you do?  

Will you have already purchased your home and secured a low fixed interest rate?  

Or will you be buying half the home you need because it's all you can afford?  

If you are ready to consider buying your first home, or your dream home, contact us to find out how much you qualify for.  We can also provide referrals to the best Realtors and other service providers you may need.

Thanks for reading - please consider leaving a comment below.

Robert F. Rosenbaum, Jr.
The Rosenbaum Lending Group
1st Portfolio Lending Corp.
8300 Boone Blvd., Ste 200
Vienna, VA 22182
(703) 879-5200  Office
(703) 608-1110  Cellular
(703) 891-9815  Direct Fax 
NMLS License: 649782
Notary Public


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