Every mortgage includes two major financial considerations: the price of the home and the loan’s interest rate. Today we’re talking about how these two factors affect the overall price of a house, and how they affect your decision to purchase a home. There are various factors that determine your mortgage and the dynamic between your interest rate and the purchase price of your home.
Interest Rates Fast Facts
- Contrary to popular belief, the total amount of your sale and your interest rate are not the only factors that determine your monthly mortgage amount. The final mortgage payment may also include private mortgage insurance (PMI), homeowners insurance, and property taxes.
- Your lender will consider your overall credit score, your debt, the type of loan, the purchase price of the home you are interested in buying, and your down payment in determining your lending rate. This could be better or worse than the advertised rate.
- Unfortunately, lenders use a report that compiles your FICO scores from the top 3 credit reporting agencies and usually base their loan decision on your middle credit score. If you are applying with a partner, they will use the lower middle score.
All The Variables in Your Mortgage Cost
The cost of your mortgage and what you will pay back to your lender over the life of your loan includes several variables.
The first and largest part of your mortgage calculation is the total purchase price of your home. Next, your lender will use your approved interest rate and factor that into your monthly payment. If your total down payment is less than 20% of the purchase price, your lender will require Private Mortgage Insurance (PMI), which will also be factored into your monthly payment. Lastly, your property taxes will also be calculated and factored into your monthly payment amount.
Waiting Is A Mistake
It may seem a little daunting to buy right now with the low inventory, but keep a few things in mind. Historically speaking, interest rates are still very low. Industry experts have predicted that home prices will level off, but not fall. Home prices and interest rates have an inverse relationship. If your interest rates are low and a home price is high, you may pay less overall than if interest rates were high and the home price was low. If you can comfortably afford the home you want today, there is no reason to wait. The Federal Reserve is set to raise interest rates again in mid-June so NOW is the time to buy!
Buy a Home Today With Our Help!
An experienced real estate professional can make all the difference in buying your dream home. Did you know that nearly 50% of the home sales last year were done OUTSIDE of the MLS? This means that most buyers are missing out on half of the homes that are actually available. 303-529-0697 is experienced in guiding clients through the changing real estate market, interest rates, and negotiations. Let us take the stress of buying off your shoulders by getting you Priority access so you see the home first before other buyers, and we can negotiate the lowest possible price for you! Contact us today to learn more at 303-529-0697
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