From the KCM Crew for buyers blog on March 24, 20014:
We have often suggested that potential home buyers consider rising interest rates when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates continue to increase (as is projected by Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association).
Money Magazine, in its latest issue, agreed with our analysis as they also warned their readership of the same ramification if they waited to buy a home.
Here is what they said:
"BE MINDFUL OF RATES. The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan. Will you need a big loan? Better to act soon before rates tick up."
And the monthly increase Money mentioned did not take into consideration that prices are also projected to increase over the next year. Here is what the additional cost would be if prices rise by the 4.5% projected by the latest Home Price Expectation Survey and interest rates go to 5.3%.
Thanks again to KCM for the article above.
So far year to date (2014) the list price vs sale price in Apple Valley, MN for a 4 bedroom 2-3 bathroom home shows listing at $247,450 and selling at $237,000. So far this year we have only seen 79 listings, too few really to chart meaningfully, but taking a look at the bigger picture, it is rare to find a 4 bedroom home in Apple Valley for under $200,000 anymore.
Working with many first time home buyers looking at purchasing a property to grow into can be challenging. As interest rates increase and as property values increase this will become even more challenging.
If you are in the market for a home, you are not alone. There are many buyers actively searching for the right home for the right price. Your best bet when competing with other buyers is to be prepared. Get yourself pre-approved with a qualified lender or two. Reach out and talk with a REALTOR to learn about the home buying process. It is more than just looking and finding the right property. I look forward to helping my clients through the whole process and following up with them once they have moved into their new home. I'm happy to help each step of the way and after the sale too. Your best bet in this market is to talk to real estate professionals sooner rather than later.
Liz Lewis Sandwick grew up in Duluth, is married to her husband Robb, has three kids: Caroline (5) Cooper (3), and Max (1) and would love to help you find your next home!