Since the economic downturn began, the effects of a bad economy on the housing market has been discussed and analyzed by everyone in the industry. Despite the various facts and statistics quoted over the years, you could summarize the majority of it with one simple statement: if you can afford to buy a new metro Atlanta home, do so now, because houses will never be cheaper.
In the last three to four months, however, this thinking has been slightly altered: if you can afford to purchase a home, do so now, because mortgage rates are climbing.
HSH.com, a trusted online mortgage and consumer loan authority, recently reported that the average rate for a conforming 30-year fixed-rate mortgage has climbed to 4.65, nearly 0.60 points higher than it was three months ago. Historically, a rate of 4.65 percent is low, but compared to the rates we’ve seen in the last year, it may not seem that way.
Freddie Mac published a chart that outlines the average fixed mortgage rates over the past 40 years. You don’t have to look far back to see where the rates nearly double what they are now. Just 13 years ago, in 2000, the average rate was a whopping 8.05 percent! For anyone who purchased a home during the two decades prior to 2008, you have felt the sting of significantly higher interest rates.
So, why should you purchase a home now?
This is probably the lowest mortgage rates will be for the foreseeable future, so now is the best time to lock in your rates. In August, the KCM blog published an article that illustrated the urgency to lock in the current rates. In 2012, the median-priced home was selling for $187, 800 and the 30-year fixed mortgage rate was at 3.5 percent. After a down payment of 20 percent, the monthly mortgage payment rounded out roughly to $675. This year, the median home price has reached $213,000 with an interest rate of 4.5 percent, which makes your monthly payment around $865. Next year, the median home price is expected to rise to $224,175 with a mortgage rate topping 5 percent. This would bring your monthly mortgage payment to more than $960!
Year Home Price Money Down Mortgage Interest Rate Payment
2012 $187,800 $37,560 $150,24 3.5% $674.64
2013 $213,500 $42,700 $170,800 4.5% $865.42
2014 $224,175 $44,835 $179,340 5% $962.74
Looking at this example, the cost increase from 2012 to 2014 was nearly $300 per month! If you are waiting to purchase a new home, you may want to reconsider and begin your Atlanta new home search now.
For more information on how the changing interest rates can affect you, or to begin the process of securing your home mortgage loan, contact Randee Black with Starkey Mortgage at email@example.com or 678-350-9041 or visit www.StarkeyBuilderServices.com.
Equal Housing Lender. Georgia Residential Mortgage Licensee. 7000 Central Pkwy. NE, Suite 1440, Atlanta, GA 30328.