At the risk of overstating the obvious, the cost of a mortgage goes up as interest rates rise. However, what often gets missed in the calculations is the reduction of buying power that occurs when mortgage interest rates rise. Why?
Posted by
December 22, 2018
December 2018 Newsletter
Mortgage lenders calculate the maximum loan available based on a percentage of debt associated with housing and total household debt. Housing associated debt typically includes the principle (the total value of the mortgage divided by the term, typically 360 months), interest, property taxes, and property insurance. If the property is a condominium or in a community with required homeowner association dues, these are added to the total. Total debt allowed for housing expenses varies by loan product but is generally around 35% of annual gross income. Assuming that no thing else is changed in the equation, the ability to purchase the same property decreases over time as the mortgage interest rises.
For example, let’s assume that you have your eyes on a $500,000 home and are planning on a 20% down payment. This would require a $400,000 mortgage. With each quarter point rise in the interest rates, the ability maintains the same debt ratio decreases by 2.5%. Your purchasing ability is now around $390,000. To purchase this particular home, you would have to either increase your down payment or look for a variable rate loan product.
The bottom line is that if you are looking to buy your first home or trade up/down to your next home, it may save you tens of thousands of dollars to make your move now while interest rates are still at historic lows. The current average interest rate for a 30-year fixed mortgage is around 4.75%. The Mortgage Bankers Association is projecting this rate to rise to around 5.2% by the 3rd quarter of 2019. This increase will lower your purchasing power by around 5% – at the same time that CoreLogic is projecting home prices to increase about 5%.
Finding your perfect home and negotiating the best deal requires local market expertise. No one is more skilled at local market knowledge than a professionally trained Harry Norman, REALTORS® sales associate. Ready to make a move? We are ready to help you achieve your goals. Promises kept, relationships enriched.
In Sandy Springs, Santa’s Fantastical is an Instagrammer’s Christmas dream
Starting November 16, Atlantans can get a dose of holiday whimsy at Santa’s Fantastical. The indoor pop-up is set in a former Babies’’R’’Us space at 1155 Mt. Vernon Highway in Sandy Springs (on the same side of the shopping center as Chick-fil-A). Running through December 24, tickets are $36 for adults, $32 for children 12 and under, and children under three are free.
Reminiscent of the Museum of Ice Cream and Color Factory concepts in New York and Miami that have flooded many social media feeds, Santa’s Fantastical is divided into themed rooms with interactive components. The founders are husband-and-wife team Walt Geer and Sarah Blackman. Geer is the CEO of PictureU, which specializes in event photography, including mall Santa meet-and-greets. Noticing the recent struggles of shopping malls, they began to wonder about new ways for families to interact with Santa.
10 Ways to Decorate with Outdoor Christmas Lights
As anyone who has untangled a snarled string of lights or come up 5 feet short on the roofline can attest, the process of hanging holiday lights is more complicated than it looks. A satisfying result depends both on having the right products on hand as well as proper installation. Let us help take the guesswork out of your holiday light setup this year with tips from lighting professionals, including tricks for hiding cords, the best lights for tree-wrapping and how to evenly hang lights along the eaves of your home.
Inspired Giving:8 Unique Gift Ideas to Make the Holidays More Luxurious
Looking for a truly unique gift for the luxury lover in your life? Our editors have combed their little black books to suggest the best luxury gift ideas for the most discerning or difficult-to-buy-for people. Take inspiration from the rarest jewels and finest spirits to games that look as good as they play, an elegant new beauty routine, some seriously impressive chocolates, and more…
Celebrate Hanukkah in Atlanta with these Recipes, Sufganiyot and More
Thanksgiving is over, which means it’s time to turn our attention to…Hanukkah? Yep, the Jewish Festival of Lights begins early this year, with the first night kicking off on Dec. 2. Read on for latke making tips from local chefs, the best places to find sufganioyt and more.
Things to Do
Reindog Parade – Dec 1
Rudolph Puppet Show – Dec 1 – 30
Lights – Botanical Garden – Dec 1 – Jan 6
Sleighbells on the Square Race – Dec 8
Christmas Symphony – Dec 8 – 9
Jingle Ball – Dec 14
Chick-Fil-A Peach Bowl – Dec 29
Thanks for Stopping By!
My name is Christopher Huffer, and I am a licensed realtor at Beacham and Company. Atlanta real estate is my passion, and I enjoy working with both buyers and sellers. Learn more about my services.