Lower interest rates can mean buy more house. A buyer who was looking at an interest rate of 5-5 1/2 per cent had limits on how much he could buy. Now that rates are for conventional a little above 4 1/2 and FHA is a straight 5, that same buyer can buy perhaps $20,000 more in house and still be at a comfort level for monthly payments. Buyers should realize that now is the time to buy as much house as they can. Even if it feels a bit of a stretch compared to the rent they were paying or the house payments on their previous house, it means a house they will be comfortable with longer and the need to move will not be as likely. One needs to remember that it is expensive to sell and new financing is expensive. I had a buyer that was looking with me this evening. We had seen houses on Saturday that just did not interest her. As I sat in front of my computer screen this morning the thought came to me that she should look higher but have about the same monthly rate. We went looking and a match was found. The $5.37 that she was paying per $1,000borrowed now meant $5.29. A loan of $239,000 was PI of $1283 per month. She will now be paying $1264.. That difference of about $20 per mo encouraged her to buy more house. The math works.
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