As we approach the general elections, the market can slow considerably. This is especially true during the election of a new president. Although this year is not a presidential election, many people see this as an important election, which affects the real estate market in a similar way to a presidential election. That and rising mortgage rates have got the buyers market crawling. Its hard to tell which has the most negative affect on property sales, but combined together, and it adds up to SLOW.
Needless to say, when mortgage rates go up, the buying power goes down. For example, lets say you qualify to purchase a $200,000 home at 3.5% interest rate. Your payments would be $898 per month. If interest rates go up .5%, that same home would cost you $955 monthly. In order to keep the same payment under $900 monthly, you now only quailfy to purchase a home at $187,500. That is a loss of $12,500 in your buying power.
What do we learn from this? Get off the fence and purchase the home before your buying power continues to go down. Its cheaper than renting a home.
