Homeowner in Northern Va will cheer since home prices, on average, have continued to increase in 2017. Future homebuyers can also be excited since historic low interest rates have done the same. We all know that housing in Northern VA can be very expensive and with every small rate increase, purchasing power drops. This is why first time home buyers as well as trade up buyers considering to purchase a home, should understand the high impact of low interest rates in Northern VA.

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.92%, which is still near record lows in comparison to recent history!

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money in Northern VA.

Give me a call to chat and see how and if I can help. Specializing in happy home sellers and homebuyers, selling starter homes, trade up homes, premium homes, Green Certified homes, and luxury real estate in Northern VA. Selling homes since 2003 to first time home buyers, relocating clients, first time home sellers, luxury clientele, downsizing, and trade up clientele. Helping home sellers sell quickly and profit more with a carrier average days on market of 39 days.

Article originally posted on my KCM blog, here.