How do interest rate affect a home purchase transaction? This past week with interest market volatility has provided both excitement and anxiousness for many potential buyers.
On Monday Sept. 15, rates for a 30 year mortgage were as low as 5.25% with 1.5% points on avg. On a 400,000 mortgage it equates to a $2,208 monthly payment, principal and interest.
However, as of this writing on Friday the 19th, rates are 5.75% with similar points. That payment on the very same loan amount just went up to $2,334!!!. Thats $1,500+ per year, $45,000+ over the life of the loan.
For certain, most always there exixts these fluctuations, which we have little control over. One ideal solution is to simply ask yourself as a buyer, "Can I afford these payments" , or "am i willing to pay this amount monthly for this particular home". If the answer is YES, then look for a lender to lock in the rate right away and see that they will offer you a free float down feature, that is even if the rate is locked you can float down to a lower rate during the lock period.
This year we have seen on several occassions, extreme fluctuations in rates in a very short periods. The potentially low rates many have predicted seem to last but a few days at best.
A buyer should choose a lender that has flexibility that will give the buyer the confidence to buy without surprises.
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