Mortgage rates rise and home prices rise not even sure what the difference is between the two. How does this affect my chances of buying my new home? I don’t really get Real Estate jargon and I’m terrified of getting scammed.
In: 20
Okay. So. Interest rate is the cost of the loan. So for a 600k loan at 6% interest over 30 years equates to around 1.2 mil. The interest rate will also effect your monthly payment. 600k at 3% is around 2500 a month. 600k at 6% is like 3500-4K a month.
So if you get into a purchase deal you need to factors a few things in. The cost of the home (home price) and how much it’s risen/fallen, the current interest rate on mortgage loans and where you think interest rates will be in the future. Based on the cost of the home and where the value is headed will help you figure out if you need to “buy down” your interest rate. It’s usually around 8k to “buy down” .25% off your interest rate- it’s called a point.
One piece of advice. Never get an ARM (adjustable rate mortgage) loan unless you are flush with cash and hardly need a home loan in the first place.
A good example of a home buying process right here:
Find home you like. Listed price is 650k. You have 60k for a down payment. You find a lender and talk with them about a home loan for 590k. That’s when the rate conversation comes up. Different companies offer different rates. The rate will determine your monthly payment and overall amortization (total cost of loan and interest) over the term of the loan (usually 15-30 years)
I think I said that all right. Baked and have a real estate license I don’t use.
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