Brenda Alfano, guest blogger and mortgage expert, shares some interesting scenarios regarding mortgage interest rates and home values, and how it could affect home sellers and buyers.

Hello from Brenda Alfano, Mortgage Consultant!

Last month I gave you some industry news of the moment. Hope that might have interested some of you.

The news lately is that rates are staying steady but they are expected to start going up slightly next year as the Federal Reserve recently mentioned. What does this mean to the home buyer?

Well basically it means for the same house price you would be paying a higher payment. If the house price goes up as well, as they have been steadily doing, you will have less buying power for the same payment as today. Here is an example of what I mean:

If you bought a home today for $450,000 putting 10% down and loan amount would be $405,000 and “suppose” the rate was 4.25%, Principal and Interest payment would be $1992.36.

If you bought the same house with a price increase of 6% (based on earlier this year, that is a conservative estimate) so the price would be $477,000 and the rate increased to 5.25%, the Principal and Interest payment would be $2370.61. That would be an increase of $378.25 in payment. Significant difference!

Rates are just used for scenario purpose only – actual rates based on credit and market conditions at the time of purchasing.

So the moral of the story is: if you are thinking of buying (or selling then buying) now is really a great time to move on that thought.

I would be happy to work this scenario up with different purchase prices for anyone as well.

Until the New Year, may you have a great Holiday Season, Merry Christmas and Happy New Year!!

Brenda Alfano
Mortgage Consultant
Absolute Mortgage
NMLS 229897
425-330-2039