Home buyers will see higher interest rates this year, and it may affect your purchase power for a Northwestern Wisconsin home. Rates are already near 4% for a 30-year, fixed-rate mortgage, and they’re expected to climb further in the months ahead.
Here’s why it matters. Until you lock in your mortgage rate with your lender, an uptick in rates means a higher payment for the same house. A $200,000, 30-year fixed mortgage at 4% means a monthly principal and interest payment of $954.83. If rates hit 5%, the same mortgage would have a P&I payment of $1,073.64, which is an extra $118.81 per month.
When you qualify for a mortgage, lenders examine your debt-to-income ratio with your new mortgage payment in mind. For some buyers, an extra $118.81 wouldn’t hurt their approval. For others, it could be a game-changer, and reduce the amount of mortgage the lender will approve. It all depends on your income, credit score, debt payments, and the direction of interest rates.
If you haven’t done so already, it’s time to refresh your mortgage pre-approval! Stay in touch with your lender, and update your pre-approval every few weeks. It’s better to know your purchase power up front, than to be surprised after you’ve made an offer.
Need a mortgage lender? Ask us for a personal referral! As a locally-owned family business with over 40 years of experience, we can help you with every step of the home buying process. Call Six Lakes Realty today for friendly, hometown service!
Six Lakes Realty
Office: (715) 924-4806