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    How a Change in Mortgage Rate Impacts Your Homebuying Budget

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    Mortgage rates are on the rise this year, but they’re still incredibly low compared to the historic average. However, anytime there’s a change in the mortgage rate, it affects what you can afford to borrow when you’re buying a home. As Sam Khater, Chief Economist at Freddie Mac, shares:

    Since January, mortgage rates have increased half a percentage point from historic lows and home prices have risen, leaving potential homebuyers with less purchasing power.” (See graph below):

    salisbury md realtor salisbury md real estate wicomico county real estate real estate wicomico county md long and foster real estate salisbury md sussex county real estate sussex county homes for sale sussex county houses for sale sussex county land for sale sussex county zillow sussex county mls weichert nj sussex county houses in sussex county for sale sussex county real estate mls sussex county mls listings sussex county real estate listings wicomico county real estate homes for sale in wicomico county md eastern shore real estate eastern shore homes for sale eastern shore waterfront homes for sale houses for sale eastern shore eastern shore realty eastern shore land for sale eastern shore waterfront property for sale eastern shore homes eastern shore farms for sale eastern shore realtors eastern shore real estate for sale eastern shore houses houses for sale in wicomico county md wicomico county homes for sale land for sale in wicomico county md houses for sale in wicomico county houses for sale wicomico county brandon brittingham brandon brittingham realtor brandon brittingham real estate brandon brittingham long and fosterWhen buying a home, it’s important to determine a monthly budget so you can plan for and understand what you can afford. However, when you need to stick to your budget, even a small increase in the mortgage rate can make a big difference.

    According to the National Association of Realtors (NAR), today, the median existing-home price is $313,000. Using $300,000 as a simple number close to the median price, here’s an example of how a change in mortgage rate impacts your monthly principal and interest payments on a home.salisbury md realtor salisbury md real estate wicomico county real estate real estate wicomico county md long and foster real estate salisbury md sussex county real estate sussex county homes for sale sussex county houses for sale sussex county land for sale sussex county zillow sussex county mls weichert nj sussex county houses in sussex county for sale sussex county real estate mls sussex county mls listings sussex county real estate listings wicomico county real estate homes for sale in wicomico county md eastern shore real estate eastern shore homes for sale eastern shore waterfront homes for sale houses for sale eastern shore eastern shore realty eastern shore land for sale eastern shore waterfront property for sale eastern shore homes eastern shore farms for sale eastern shore realtors eastern shore real estate for sale eastern shore houses houses for sale in wicomico county md wicomico county homes for sale land for sale in wicomico county md houses for sale in wicomico county houses for sale wicomico county brandon brittingham brandon brittingham realtor brandon brittingham real estate brandon brittingham long and fosterIf, for example, you’re getting ready to buy a home and know your budget allows for a monthly payment of $1200-1250 (marked in gray on the table above), every time the mortgage rate increases, the loan amount has to decrease to keep your monthly cost in range. This means you may have to look for lower-priced homes as mortgage rates go up if you want to be able to maintain your budget.

    In essence, it’s ideal to close on a home loan when mortgage rates are low, so you can afford to borrow more money. This gives you more purchasing power when you buy a home. Mark Fleming, Chief Economist at First American, explains:

    “Monthly payments have remained manageable despite soaring home prices because of low mortgage rates. In fact, monthly payments remain below the $1,250 to $1,260 range that we saw in both fall 2018 and spring 2019, but they are on track to hit that level this spring.

    Although they remain low, mortgage rates have begun to increase and are expected to rise further later in the year, thus affordability will test buyer demand in the months ahead and likely help slow the pace of price growth.”

    Today’s mortgage rates are still very low, but experts project they’ll continue to rise modestly this year. As a result, every moment counts for homebuyers who want to secure the lowest mortgage rate they can in order to be able to afford the home of their dreams.

    Bottom Line

    Thanks to low mortgage rates, the spring housing market’s in bloom for buyers – but these favorable conditions may not last for long. Let’s connect today to start the homebuying process while your purchasing power is still holding strong.

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