The Problem With Rising Interest Rates… | Listing Naples Group | Blog | Naples Real Estate

The Problem With Rising Interest Rates…

The first step any buyer needs to take when buying a new home is to get preapproved for a mortgage. Your lender will give you an amount of money you may borrow at a certain interest rate. But, what happens when mortgage interest rates rise?

Buying a Home / Chris

The Problem With Rising Interest Rates…

The first step any buyer needs to take when buying a new home is to get preapproved for a mortgage. Your lender will give you an amount of money you may borrow at a certain interest rate. But, what happens when mortgage interest rates rise?

A Change in Monthly Payment

The average home in Naples as of this writing comes in at $325,000. Today’s interest rate for qualified buyers is an incredibly low 3.69% for a Freddie Mac 30 year fixed loan.

With the statistics above, your monthly principal and interest (P&I) payment on the mortgage would come in at $1,494 per month.

If interest rates were to rise roughly a 1/4 of 1%, your new monthly P&I is $58 more expensive at $1,552 per month.

One quarter point difference costs an additional $43 per month!

A Change in Preapproved Amount

We can look at this differently. Imagine your dream home is on the market at $325,000! You’re ready to buy except you’re suddenly not preapproved any longer at that amount. The interest rates have risen so you’re only approved now for $315,000 and not the $325,000 before! Unfortunately, you’ll have to put more money down to buy the same home.

So What Does This Mean for You?

It is very common to hear a buyer say, “We’re going to wait a bit and see what the market does.” That sort of thinking is great when we’re staring down a real estate bubble. However, with steady prices and an efficient market, passing up a low interest rate can truly hurt your finances. Speak to your Realtor® and mortgage broker to hear their professional advice before you make a decision.

What is Your Next Step?

Tori Juran with Movement MortgageGive Tori Juran with Movement Mortgage a call. She is the best in the business! With just a little bit of information, Tori will be able to give you the amount of home you could reasonably buy.
Tori can be reached at (239) 205-7122 or by email.


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