Mortgage Interest Rate Surprise?

| January 10, 2011 | 0 Comments

Interest rates have been surprisingly low for such a long time, no one really thought they would go up. Well, they did, and everyone was caught off guard.

In fact, at the end of December, mortgage interest rates increased to 5%. and slighly higher. A surprise to most people involved with real estate!

The Good News is that they have dropped back down to 4.75% in the past week. However, prior to the increase they were in the 4.25% range. That is still a half percent difference. That difference in a .5% change in an interest rate would be approximately $41.00 per month for a mortgage in the amount of $275,000. In other words, the rate increase of .5%, increased a monthly mortgage payment by approx $41.00 per month this past month for buyers searching for a home.

That $41.00 per month change equates into an appox $7,000 change in mortgage borrowing ability. In other words, in order to keep the mortgage payment equal to what is was at 4.25%, a buyer would have to reduce the amount borrowed by $7,000 and reduce their price range by $7,000.

Yes, mortgage interest rates do have a tremendous affect in home affordability, whether you are looking to purchase a home in Iselin, New Jersey, Colonia, Edison, in Middlesex County or any other State. With mortgage rates still at historically low levels, the important question is when will they increase and by how much!

Planning on buying a home in 2011? Take advantage of mortgage rates now before you start finding that they are in the 5% plus range! Why risk higher mortgage payments or lowering your price range due to increased mortgage interest rates?

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About the Author:

David Fialk The above article was written by David Fialk, REALTOR, Broker Owner, Choice Realty Co., Iselin, New Jersey and regularly posts real estate articles of interest for home buyers, home sellers and home owners. David can be reached via email or by phone at 732-283-3400 or at www.DavidFialk.com. Licensed since 1971, David has helped over 1800 families move across town, across the state and across the country and specializes in the towns of Iselin, Colonia, Edison, Woodbridge, Avenel, Fords, Sewaren, Port Reading, Keasbey, Carteret and Metuchen in Middlesex County, New Jersey. Planning on purchasing real estate? Thinking of selling your home? For real estate information ”You Can Rely On, Contact the REALTOR You Can Rely On”.