How Much Waiting a Year to Buy Could Cost You

This week, Zillow's blog featured a post about the impact of a potential 1% increase in interest rates in a year.  Zillow applied next year's forecasted home values and a 1 percent percentage point increase to the median home price in 35 metro areas around the country.  They used that to calculate the difference in mortgage payments between today and a year from now.  

“More often than not, buyers do not understand the profound effect of rising interest rates on affordability,” said Erin Lantz, vice president of mortgages at Zillow. “Many buyers associate a 1 percentage point interest rate change with a 1 percent change on a piece of clothing or the price of a car, when in fact they are very different.

As a rule of thumb, Lantz said, a 1 percentage point increase in mortgage rates reduces affordability by 10 percent."

Their blog post featured how much mortgage payments would increase in some metro areas (Boston: increase by $198/mo for example). 

However, as Zillow notes and we agree and advise, buying a home is not all about money.  Financial stability and readiness to make a longer term financial commitment are considerations that always should come before jumping on a deal just to get a deal or save money.  Feel free to contact us today for advice on home buying and selling!

 Click here to read the full blog post on Zillow.