Mortgage rates expected to rise throughout the year

Rising home prices are giving potential homeowners reason to wait

ORLANDO, Fla. – Rising home prices are giving potential homeowners another reason to wait. Mortgage rates are expected to rise throughout the year.

The New York Times recently looked at how to assess today’s housing market. First, plan on mortgage rates to rise, but that doesn’t necessarily mean the housing market will slow down, or even fall.

The Times cites a recent study that found competition among buyers could still be strong even if rates rose to 6.5%. You will need to do the math if you could still afford that house you’re looking at with a higher interest rate.

Financial planners recommend people spend no more than about 35% of their income on total housing costs.

To give you a dollars and sense breakdown of what higher rates mean — consider that a $300,000 loan at about today’s rate, around 4%, will give you a monthly payment of about $1,432. Bump that interest rate up to 6% and the payment grows to almost $1,800 — a jump of about $367 a month.

One of the big rules to use, if you still want to go ahead with a purchase, are you willing to stay in the house for at least five years? That will give the home time to gain a bit of equity.

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