Well it looks like the cost of buying a house is going up soon. Wednesday, the Federal Reserve voted to raise the key interest rate on quarter percentage point. This is the first of three hikes they are anticipating for 2017. The interest rate was also increased a quarter of a point and December of 2016. This is a departure from previous policies. The interest rate was only increased twice in the preceding 10 years.
Many in the industry think that this will make housing less affordable. Others believe their concerns are overblown. These rate increases will make many question if they are buying more than many people can afford. However, a $300,000 mortgage at 4.25% leaves a payment of $1475. At 4.5% the mortgage payment goes up to $1520.
A recent survey by a major mortgage company found the majority of home buyers would continue with their purchase plans even if the rate increases resulted and hundred-dollar increase in their monthly mortgage payments. Many others would go with their purchase even if their payments would increase by $200 per month.
So what’s the solution? Stop buying that $4.00 (or more) cup of coffee every day and go to a convenience store and get a cup for $1.00
You’ll be ahead of the game if you do.