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How Will Rising Intrest Rates Effect Your Buying Power In Our Local Grand Rapids, MI. Real Estate Market??

Rising Intrest rates = Higher Mortgage payments for Home Buyers in Grand Rapids, MI.
How Do Rising Interest Rates Affect Affordability?
As responsible Lenders it is up to those of us who care deeply about our clientele to help them understand how qualifying REALLY works.  It is not accurate when a Home Buyer is told they qualify for a particular purchase amount.
When we pre-approve a borrower we do so by qualifying them on a certain payment, not purchase amount.  There are a number of variables that can effect that payment amount...Taxes, Insurance, and Interest Rates being the main three!
Most Home Buyers, when educated properly, want to look at a payment that is comfortable for their lifestyle, based on their other expenses and personal needs.  Who wants to eat Mac & Cheese every night.
When Interest rates begin to rise Affordability shifts downward for the buyer.  A 1% increase in rates decreases buying power by 10%.
Things to carefully consider as rates rise:
 Buyers will suffer if they have higher payments because they will not be able to maintain the lifestyle they are accustomed to.  In a worse case scenario they may no longer qualify for the home they have ... more

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