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Interest Rate Increase and What Does It Mean To You

If you own your home, the interest rate increase will not affect you.  Unless of course if you have an ARM or adjustable rate mortgage. If your mortgage is a fixed rate, you have nothing to worry about, and you can be thankful that you bought or refinanced at record low rates.  If you have an ARM that is close to its adjustment date, you may want to talk to a mortgage professional. If you are in the market for a new home or mortgage you may want to get off the sidelines and get into the game.

So what does a .25% increase mean to your potential mortgage payment?  A fixed rate mortgage as of December 12, 2016 would be around 4.185%.  On a typically priced home of $190,000, not including taxes and insurance, and assuming a 10% downpayment you could expect a payment around $834.  The same loan financing 100% would cost about $927 per month.  With an interest rate increase of .25% the first loan would increase to $853 and the second example to $948.  Both of these are negligible changes of about $20 per month.

With this example in mind, a minimal increase like this will not affect your buying power.  However a larger increase of one full percentage would certainly impact what you can afford.

Now would be a good time to get your prequalification updated, and make some decisions.


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