How a Change in Mortgage Rate Impacts Your Bungalow Budget

 

Mortgage rates are on the rise this year, but they’re still incredibly low compared to the historic average. However, anytime there’s a change in the mortgage rate, it affects what you can afford to borrow when you’re buying a home. As Sam Khater, Chief Economist at Freddie Mac, shares:

Since January, mortgage rates have increased half a percentage point from historic lows and home prices have risen, leaving potential homebuyers with less purchasing power.” (See graph below):

How a Change in Mortgage Rate Impacts Your Homebuying Budget | Simplifying The MarketWhen buying a home, it’s important to determine a monthly budget so you can plan for and understand what you can afford. However, when you need to stick to your budget, even a small increase in the mortgage rate can make a big difference.

According to the National Association of Realtors (NAR), today, the median existing-home price is $313,000. Using $300,000 as a simple number close to the median price, here’s an example of how a change in mortgage rate impacts your monthly principal and interest payments on a home.How a Change in Mortgage Rate Impacts Your Homebuying Budget | Simplifying The MarketIf, for example, you’re getting ready to buy a home and know your budget allows for a monthly payment of $1200-1250 (marked in gray on the table above), every time the mortgage rate increases, the loan amount has to decrease to keep your monthly cost in range. This means you may have to look for lower-priced homes as mortgage rates go up if you want to be able to maintain your budget.

In essence, it’s ideal to close on a home loan when mortgage rates are low, so you can afford to borrow more money. This gives you more purchasing power when you buy a home. Mark Fleming, Chief Economist at First American, explains:

“Monthly payments have remained manageable despite soaring home prices because of low mortgage rates. In fact, monthly payments remain below the $1,250 to $1,260 range that we saw in both fall 2018 and spring 2019, but they are on track to hit that level this spring.

Although they remain low, mortgage rates have begun to increase and are expected to rise further later in the year, thus affordability will test buyer demand in the months ahead and likely help slow the pace of price growth.”

Today’s mortgage rates are still very low, but experts project they’ll continue to rise modestly this year. As a result, every moment counts for homebuyers who want to secure the lowest mortgage rate they can in order to be able to afford the home of their dreams.

Bottom Line

Thanks to low mortgage rates, the spring housing market’s in bloom for buyers – but these favorable conditions may not last for long. Let’s connect today to start the homebuying process while your purchasing power is still holding strong.

Share:

Facebook
Pinterest
Email
Print
Mark Hughes

Mark Hughes

Mark Hughes is the President and curator of Bungalows and Cottages LLC, Blog, and Networks. Mark's mission is to bring the design, history, and lifestyle of smaller comfortable iconic American bungalows and cottages to everyone. Mark is a real estate broker, manager, and coach, and industry executive who once ranked in the top 1% of agents worldwide for sales and has sold or managed over 6 Billion in U.S. real estate sales. Small Home, Big Life.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top

Get The Newsletter

By subscribing you are agreeing to our Terms and Conditions & Privacy Policy

Laird Bunch

Laird is our B&C local expert agent for Delaware, Maryland and Southern PA.

Will Flannigan

Will covers the East Los Angeles Market for Bungalows Cottages. 

Bungalows and Cottages Logo

Expert Agent Connect

Connect with your local B&C expert to find, understand, and secure your next dream home. We’re here!

Or Call our Call Center at 941-275-2630

*By proceeding, you consent to receive communication at the
number you provided, and email, from bungalowsandcottages.com and
real estate professionals and their network of service providers about
your inquiry and other home-related matters. Msg/data rates may
apply. This consent applies even if you are on a do not call list and is not
a condition of any purchase.

Bungalows and Cottages Logo

Dakota Feroleto

Dakota covers the Southern California Desert Region for Bungalows and Cottages which includes Palm Springs, Rancho Mirage, Palm Desert, Indian Wells, and La Quinta.

Ken Riel

Ken covers the Charlotte North Carolina Market for Bungalows and Cottages which includes Plaza Midwood, Elizabeth, Chantilly, Wesley Heights, Dilworth, NoDa, and Wilmore.

Karen Barks

Karen covers the Portland Oregon Market for Bungalows and Cottages from Beaverton and West Portland to the North and Northeast neighborhoods.

Chris Zoller

Chris covers the Tamp Florida Market for Bungalows and Cottages from Hyde Park, to Ybor, Seminole Heights, Historic Kenwood, and all around town.

Contact Chris:
941-275-2630
chris@whttampa.com
or Send A Note:

By sending you are agreeing to our Terms and Conditions & Privacy Policy

Jen Berbas

Jen covers the Austin Texas Market for Bungalows and Cottages from Downtown, to Old West Austin, Chestnut, Travis Heights, Rosedale, and all around town.

Mark Hughes

Mark covers the Los Angeles Market for Bungalows Cottages. Mark also serves as the liaison to the B&C Expert Partner Agent Network.  He loves Bungalows and Cottages!

Contact Mark: Call Center
818-480-2864
mark@bungalowsandcottages.com
or Send A Note...

By sending you are agreeing to our Terms and Conditions & Privacy Policy

Peggy Graef

Peggy covers the Orlando Florida Market for Bungalows and Cottages from Colonialtown, and College Park to Winterpark, and Thornton, and all around town.

Mike Dobbs

Mike covers the West Side Los Angeles Market for Bungalows and Cottages.

Steven Lambert

Steven is our B&C local expert agent for the Tri-Cities in Washington.

Amanda Rose

GA Lic#243859

Amanda covers the Atlanta Market for Bungalows & Cottages. 

Thomson Meeks

Thomson covers the Asheville Market for Bungalows Cottages.

Contact Thomson: Call Center
818-480-2864
or Send A Note...

By sending you are agreeing to our Terms and Conditions & Privacy Policy

Submit Your BnB

Fill in your BnB details and we’ll review it for addition to our growing map of Bungalow and Cottages BnB’s.

*By sending you are agreeing to our Terms and Conditions & Privacy Policy.

Shannon Praetorius

Shannon covers the Seattle Market for Bungalows Cottages. Connect with Shannon here to find your best B&C Market guidance.

Contact Shannon: Call Center
941-275-2630
or Send A Note...

By sending you are agreeing to our Terms and Conditions & Privacy Policy

Anne Jensen

Anne covers the Los Angeles Market for Bungalows and Cottages along the south city side and LA’s southern coastal areas.

Contact Anne:
Call Center 818-480-2864
or Send A Note...

By sending you are agreeing to our Terms and Conditions & Privacy Policy

Judy Hughes

Judy Hughes is a Orange County, CA sales expert and accomplished renovation consultant.

Call or text Judy at 562-972-0491
or send a note...

By sending you are agreeing to our Terms and Conditions & Privacy Policy

Kathy Engen

Kathy is our B&C local expert agent for Edina MN.

John Staab

John is the Managing Broker and accomplished real estate consultant for Motive Real Estate Fort Worth Texas. Lic #0525982

Ken Farah

Ken covers the San Diego County Region for Bungalows and Cottages.

Alex Fotouhi

Alex is our B&C local expert agent for Seattle Washington.

Bungalows and Cottages Logo

Agent Lead and Referral Network

Realtors® Fill in your details to join our growing exclusive B&C Lead and Referral Network and we’ll get back to right away.

*By sending you are agreeing to our Terms and Conditions & Privacy Policy.