Home affordability is actually very good nationally because interest rates are still historically low. However, this trend is expected to come to an end very soon.
According to the Economic Forecast Agency, the 30 year fixed rate is forecasted to be above 7% within just 4 years, which will severely drop one’s buying power, especially in high cost markets.
For example, a $500,000 loan at 4% has a monthly payment of $2,387, but at 7% that same $500,000 loan has a payment of $3,326! That’s nearly $1,000 more per month to borrow the aame $500,000.
And if your budget is that $2,387 payment, when rates hit 7%, that payment will only get you a loan for $358,000. That’s $140,000 LESS buying power. So whether you are wanting to save money with a refinance or you’re thinking about purchasing your dream home, now is the time to do it for the lowest rate and most affordable payment!