Economists are warning that rising mortgage rates could have a big impact on the direction you choose when shopping for real estate. Rising interest rates make it more difficult to afford the home of you want.
Keep your home buying plans on track by speeding up your home search this spring, as interest rates are
forecasted to move higher in the coming months.
Forty-four percent of
home buyers say rate increases likely will force them to settle for a
smaller, less expensive home that requires a longer commute to their
jobs, according to a realtor.com® survey. First-time buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.
Rate increases—even minor ones—can add up over time. Realtor.com®
offers this example: On a $300,000 house with a 30-year fixed-rate
mortgage and 20 percent down payment, the difference between a 4 percent
and 5 percent mortgage rate is $142 a month. Calculated over the life
of the loan, that is more than an extra $51,000.
Home buyers who are concerned about rising rates may want to lock in
with a lender, which guarantees the current rate for a set period of
time. Still, don’t linger on making a decision. It
typically costs several hundred dollars to lock in a rate.