The most prominent question homebuyers are asking remains: "Should I buy a home now or hold off until next year?" Why is this? It's simple. As potential homeowners we not only want to invest in a home with our dream qualities, but we're also looking to ensure we get the best deal. This does not only target the list price of a home or the cost to build. Interest rates play a huge role in the sum of this equation.
For the past ten years, interest rates have been extremely low - it's been a buyers market. It is anticipated, though, that interest rates will moderately increase within the next year. What does this mean for the homebuyer? Higher financing costs and higher monthly mortgage payments. Of course, the general increase in mortgage payments varies by market, but according to Zillow this could range anywhere from a $65-$700+ increase per month.
What if home values remain the same and interest rates are the only variable we see increase? Again, the houses in the most expensive markets will see the biggest increases in monthly mortgage payments. This will translate into lost luxuries due to tighter financial circumstances, which, in turn, will cause households to adapt to a different lifestyle (For more information on the change in monthly mortgage payments with constant home values please visit Zillow's map here).
If we see a rise in monthly mortgage payments, most of it will likely be attributed to an increase in interest rates. Therefore, homes in markets with increasing home values will ultimately feel the biggest impact, while the interest rates for homes in decreasing markets will be offset causing little difference in mortgage payments. Of course, time will be the "say all" when determining what actually happens.
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