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.
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The rate is the interest you pay on the loan. It’s a complex subject, but lets just say if you have to borrow say 200K to buy a home, your monthly payment will be higher if your interest rate is higher, and lower if your interest rate is lower. The cost of the home will be the same, but your monthly mortgage payment will be higher. You are basically paying more to borrow the same amount of money.
For the housing costs- they are supply and demand dependent. Often when interest rates go up, the demand goes down for the homes (because the cost of mortgages goes up). The guy who could afford a 200K home at low rates, may only be able to afford a 175k house at a higher mortgage rate. The demand goes down. People’s ability to pay more for a house goes down, and in many cases, that can slow down the rate that housing prices go up (and can even make them fall). (this is a little more complex, as interest rates can also impact new homes being built, renovated etc., but the general idea is when it costs more to borrow money, it slows things down a bit)
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