If you begin a search for a new home by going online to
check out the Metairie listings, it’s likely that one of the first search
criteria you enter will be the price range. After all, unless you are a virtual
looky-loo who is just checking out how the other half lives, your budget will dictate
which homes you seriously consider. If you are one of the more than two-thirds
of us who will be counting on a loan to help finance that home purchase, the
monthly payment amount is really what matters.
That’s why you don’t have to be a dedicated number-cruncher
to be keenly interested in the direction Metairie mortgage interest rates are
going to head. In fact, if you aren’t one of those whose idea of a good time
includes working out spreadsheet calculations, it probably came as a shock the
first time you realized how big a deal it is when Metairie mortgage interest
rates notch up or down even a single percentage point. If you’ve never sat down
to look at the numbers, please sit down before continuing…
For a quick example, suppose you were Average American Homebuyer
taking advantage of an average American home purchase just this past month. Your
family income was a bit higher than the median of $55,000—say, $60,000—so if
you went with the lenders’ standard rule that 28% of income is the most a
housing budget should allow, that meant $1,400 would be your maximum mortgage
payment.
You found a terrific buy—a brand new home at exactly the median
U.S. new home price, $286,000. You had saved up diligently, so the 20% down
payment was available. That made enough of a dent in the sales price to qualify
for the median mortgage interest rate, which was July’s 4.05%. Your annual
taxes and bank-required insurance came to an annual $3,000, which added $250 a
month). The whole situation made you more than median-ly happy, because it
meant that your monthly mortgage payment on the home’s 30-year fixed rate
mortgage came to only $1,350. That provides $50 of breathing room…
But remember, this quick example is one that required you
to sit down. Sooooo -- what’s the problem? It’s this talk about the Federal
Reserve wanting to raise the federal funds target rate. That would have to
trigger rises in the mortgage interest rates in Metairie (and everywhere else).
In our quick example, taxes and insurance costs stay the same; but suppose the
mortgage interest rate notches up one little percentage point, to just 5.05%?
That’s still below the historical average, yet the same home—and the same loan
except for that one percent raise—now requires a monthly $1,486 payment. That
crosses the budget recommendations—and although some lenders would likely
consider other factors that might make the loan possible, that single
percentage point rise does wind up costing Average American Homebuyer more than
$1,630 a year (and nearly $50,000 over the life of the loan).
The reality is that prudent home shoppers are currently able
to consider properties at higher price ranges than will be the case after
mortgage interest rates rise. For them, the market is literally wider than it will
become later.
A further note: August saw Metairie mortgage interest rates
fall below even July’s 4.05%. Another very good reason to give me a call!
Terez B. Harris
Keller Williams Realty New Orleans
504 975 1033
TerezHarris@KW.com
TerezSellsNolaHomes.com
8601 Leake Ave., New Orleans, La 70118
Free Reports:
No comments:
Post a Comment