Mortgage Rates Rise, How will That Effect Your Home Sale?

Mortgage rates have been rising and that has some Buyers wondering if they missed the best time to buy. Not at all, say experts. That's because the rates are still considered very low and the increase isn't sharp.

Today’s rate for a 30-year fixed mortgage is approximately 4.375%, climbing from the June 1, 2013 rate of approximately 3.9%. Based on the higher interest rate, monthly payments on loans ranging from $100,000 to $300,000 don't go up significantly.

While the increases are monthly – they will add up over 12 months – it's still quite possible for many buyers to manage. Rick Allen, the chief operating officer at Mortgage Marvel suggests that if the payment isn't manageable, the consumer could buy a less expensive home. 

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Rising interest rates often cause people to act quickly and jump into the housing market which can start to increase home prices in tight inventory markets as these potential buyers get more serious about home ownership.

If you're considering homeownership and wondering how the rise in interest rates will impact you, consult with a mortgage broker. An expert in the field can help you determine exactly how much home you can afford, at which rate, and for how long you'll have to pay.

If homeownership is high on your list, start your due diligence now. Meet with an experienced real estate agent to decide who can help you the most. Buying a home is a lengthy process and there is a lot to understand so you'll want to make sure you're compatible with the agent. You'll also want to make sure you have a clear picture of what you can afford, what you want in a home, and for how long you want to own it.

Next, since you know that rates are rising, start preparing. If you know that the home you wanted to buy was, for instance, in the $300,000 range but, due to rising interest rates, your monthly payments would be higher, and then look at your finances and see where you can cut back now to save a little more. Saving now will allow you to put more down on the home and reduce the amount of money you need to borrow which, therefore, lowers your monthly payments.

I write this often but it is most important – do your research. Don't give up on homeownership just because rates are rising. Instead, take a good look at your finances with experts and understand what you can afford now and/or how much you need to bring in to make your monthly payments manageable so you can afford a home in the near future. Education and understanding will lead to a more successful home-buying experience.