Buying a Home? Consider Cost Not Just Price
As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home.
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The Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Freddie Mac all projected that mortgage interest rates will increase by about three-quarters of a percentage point by this time next year. According to CoreLogic’s most recent Home PriceIndex Report, home prices have appreciated 5.4% over the next 12 months.
What Does This Mean as a Buyer?
Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 today if home prices appreciate by the 5.4% predicted by CoreLogic over the next twelve months:
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