Mortgage Rates Predicted To Go Up

Yesterday, I attended the Windermere Kick-Off breakfast. The highlight for me was listening to real estate economist, Matthew Gardner. This proved to be very valuable since I do a lot of business in the Bonney Lake, Lake Tapps, Buckley, Puyallup, Sumner and surrounding areas and I want to stay current with the real estate market trend and home values.

Matthew provided a substantial amount of information about the economy and housing, and he was quite entertaining. He predicts rates will be 6% by year end. I have run some figures on payments, equity position and qualifying income based on his prediction.

Using a loan amount of $300,000, the principle & interest payment at 5% would be $1610.46 per month. At 6% the payment would be $1798.65, a difference of $188 per month. At the end of five years the loan balance with the 5% loan would be $275,486, and $279,163 with the 6% loan. If you take into account the monthly savings over five years plus the additional equity, your clients can save close to $15,000 by taking advantage of the low interest rates.

The other issue that comes into play with higher rates is qualifying. Using the 5% rate plus taxes, insurance and MI, the qualifying income would be approximately $7023 per month. At 6%, the qualifying income goes up to $7650 per month. Another way to look at it is someone making $7023 per month can qualify for $300,000 at 5%, but only $268,500 at 6%. What a difference only one percentage point makes!

So if there was ever a good reason to get off the fence and start your home buying process, this is one of them. Not only are the mortgage rates at an all time low, so are the house prices. Contact me at 253-209-9701 and I will help find and negotiate a great home for you. As a marketing specialist I can help you sell your home fast and at market value.

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