Interest rates are on the rise. Rates fell from their highest in over five months last week, but home mortgage lending rates are up again this week. They rose from 4.15% to 4.18%. That’s not all that much higher than the 4% rates on a 30-year mortgage a year ago, but the upward path concerns lenders. How does a rise in interest rates affect you as a buyer? How does it affect you as a seller?

How does a rise in interest rates affect you as a homebuyer?

Buying a house involves a large initial expense. It also involves knowing what you’re getting into long-term before you buy. Knowing what you’re getting into before you buy will help you avoid the disaster of foreclosure.

Do yourself a favor and open this free amortization schedule calculator. Plug in the amount you’ll need to borrow and the interest rate at 4%. Repeat what you just plugged into the amortization schedule calculator using the same amount you’ll need to borrow, but plug in an interest rate of 4.15%. See what a difference an increase in interest rates can make in a monthly mortgage payment?

Listed below, are monthly payments for 15-year and 30-year $100,000 mortgages at different interest rates, not including any fees, like private mortgage insurance or property taxes. Notice how a 1% increase in interest rates from 4% to 5% on a 30-year mortgage results in a 13% increase in monthly payments. A 2% increase results in an incredible 26% increase in monthly payments!

Term	4% Interest	4.5% Interest	5% Interest	6% Interest
15-Year Mortgage	$740	$765	$791	$844
30-Year Mortgage	$477	$507	$537	$600

Source data: Google mortgage calculator

A note on adjustable mortgages here. Don’t fall into the trap of an adjustable mortgage. Adjustable mortgages make it seem like you can afford a mortgage when you really can’t. If you need creative financing in order to afford a house, you can’t afford it. Don’t do it.

Is now a good time to buy?

Answer the following questions to help you determine whether or not now is a good time to buy a home:

• Is your credit score above 720? A mortgage lender will give you a loan and determine the rate based on your credit score. If your credit score is low, you can expect a higher interest rate. It would be wise to wait to buy a home until you improve your credit score. While you are waiting:
  • Pay down debt
  • Remove inaccuracies from your credit report
  • Make payments on time every month
  • Avoid applying for new credit cards or new loans
• Do you have money set aside for a down payment? Putting down at least 20% of the cost of the home is ideal. This amount down will help you avoid having to pay private mortgage insurance (PMI). Since PMI protects the bank’s investment in case you default on the loan, it is a huge waste of money.
• Do you have money set aside to pay the closing costs? The closing costs associated with your mortgage can total several thousand dollars.
• What are the current interest rates? If interest rates are low, it may be a good time to buy.
• What are the experts saying about property values? Accurately predicting what interest rates or property values will do can be tough to do. Ask an expert if property values are on the rise, or if they are likely to fall. If property values are falling, it may be a good time to wait on buying a home.
• Do you plan on staying put for three to five years, two at the least? If not, refrain from buying. Now is not the time to buy a home.
• Do you have an emergency fund? This is important! If you don’t have at least six months’ worth of your current income tucked away in case of emergency, you should wait to buy a home. You need to have money in the bank to pay your mortgage if a layoff or major medical problem were to happen.
• when determining whether you should buy a house now or wait until the future. If you have recently changed jobs, if you are thinking about changing jobs, or if you are expecting any major changes to your income, it is not a good idea to buy a house until you are on more solid footing. Banks and mortgage lenders typically require you to have been with your employer for at least a year or two before they will consider you for a loan.

Are you truly ready to buy?

How does a rise in interest rates affect you as the seller?

When interest rates rise, even just a little, home prices and home values lower. This happens because higher interest rates reduce a buyer’s ability to pay for a home. Higher interest rates make financing a home purchase a lot more expensive. Low interest rates boost home prices because more buyers enter the market

Is now a good time to sell?

The answer to this question is, “Yes!” Higher interest rates equate to lower borrowing power for the buyer, so the sooner you sell, the better. Interest rates are creeping upward!

Read these blog posts for other insights on why you should consider buying or selling your home:

• 5 Factors That Indicate It Could Be Time To Move
• Is It Time To Relocate?

Whether buying or selling a home, start thinking about how a rise in interest rates will impact you in the future.

Make sure you consider the facts of this important financial decision with your head, not your emotions. You don’t want to struggle making your mortgage payments to find yourself in foreclosure down the road.

Call me, Charles D’Alessandro, your Brooklyn real estate agent with Fillmore Real Estate at (718) 253-9600 ext. 206 or send your questions to [email protected]. I can help you determine whether or not now is a good time to buy or sell your home.

“I’d like to buy a new home, but is now the best time to buy?” “I’d like to sell my home, but is now the best time to sell?” Is there an urgency to buy or sell in 2015? The answer to each of these questions is, “YES!” Here’s why …

Now is the best time to buy in Brooklyn because:

1. Waiting could cost you thousands. “With interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today’s market have become very steep,” said Jonathan Smoke, chief economist for realtor.com®. View the realtor.com® Opportunity Cost Report market list here:  Opportunity Cost Report
2. Interest rates are projected to increase in the next 12 months. Your ability to build substantial long-term wealth is decreasing. Each time interest rates increase, monthly mortgage payment amounts increase decreasing your ability to build long-term wealth. A little increase in interest rates can make a huge impact on your monthly budget.
3. Home prices are expected to continue to rise in the next year.
4. Homeownership has financial benefits. Buying a home delivers a financial benefit well over$100,000 over a 30-year period. Get the projected wealth increase for almost 100 cities here.

The cost of living is increasing. The costs of gas, taxes, insurance, etc., everything is going up.  You only make so much. You can only qualify for so much. Find out how much house you can actually afford. Can you really afford to live in the neighborhood you want to live in? Find out. Also, find out how rising interest rates will affect your ability to build wealth long-term. Take time to do the math. Reach out to a mortgage specialist. You can calculate your monthly mortgage payments using this online calculator.

Buyers, don’t get boxed out because you are waiting. You’ll miss out on significant, long-term financial gains if you choose to stand on the sidelines waiting. The longer you wait, the farther those financial benefits will distance themselves from you. Get started on the road to homeownership now!

Now is the best time to sell in Brooklyn because:

1. Job growth is increasing. More than 3 million jobs have been created in the past year. As job growth increases, demand follows.
2. Homes are selling more quickly.
3. The supply of houses is down making it predominantly a seller’s market. A tight inventory puts the ball in the sellers’ court driving home prices upward helping you build additional equity in your home.
4. There are fewer cash buyers. The increase in home prices has slowed from its recent growth. Moderate increases are still expected this year, but with fewer cash buyers.
5. Interest rates are heading upwards. Since mortgage rates are still low, more buyers are expected to move into the market in the not-too-distant future because of the projected increase in interest rates.
6. Rents are rising, too. Rising rental costs are encouraging renters to take the plunge into home ownership.

It’s a great market for sellers! Here are a few more reasons to consider listing your home in today’s sellers’ market:

If you’ve built up equity in your home, now is a good time to sell. Find out how much equity you’ve built up in your home. Ask your Brooklyn real estate agent, Charles D’Alessandro, to run a free comparative market analysis (CMA) to find out what the approximate value of your home is.

It’s worth selling your home if you’ve built up enough equity to provide 20% equity to purchase a new home. A down payment of 20% or more will keep private mortgage insurance (PMI) down.

If you’ve paid off all your non-mortgage debt and have saved 3-6 months of monthly expenses in an emergency fun, now is a good time to sell. It’s a good time to look for a new home that may be more accommodating to your current lifestyle. Read more about reasons for considering selling right here.

Now is a great time to buy or sell in Brooklyn. Take a good hard look at your finances. Then, partner with your Brooklyn real estate agent,  Charles D’Alessandro with Fillmore Real Estate. He puts service before a sale. He knows how to get things done when it’s time to sell your home or buy a new home that is better suited to your current needs. Call at (718) 253-9600 ext 206 or email [email protected].

Sources:

http://rismedia.com

https://www.dailyworth.com

http://realtormag.realtor.org

http://money.cnn.com

http://www.daveramsey.com

http://money.usnews.com

Selling a home is a stressful experience for most people. And selling your home during the holidays doesn’t make it any less stressful. But with a little creativity offered only in December, it can be done.

6 Tips to Sell Your Brooklyn Home During the Holidays

Decorate Tastefully

Holiday decorations are beautiful and make your home look and feel inviting. Traditional decorations, when displayed tastefully throughout your home, appeal to home buyers especially. Just keep the decorations simple and uncluttered.

Bake Holiday Goodies

Go ahead! Bake your own pies this year. You’ll get your Christmas goodies ready and fill your house with the welcoming scents of Christmas to entice potential buyers with, too.

Create Warmth

Keep the thermostat set at a comfortable temperature, not too warm, not too cool. Buyers won’t stay long to really look at your home if it’s cold.

Brighten It Up

Winter days are dark and gray for most of the season. Allow lots of available natural light into your home. Keep curtains open for showings during the day. Turn on lamps and other lights in your home or use automatic timers.

Share Some Holiday Spirit

It never fails. Buyers want to see your home at times that are inconvenient to you. But keep in mind, everyone is busy at this time of the year. Buying a home in December is any easier than selling a home in December, so be gracious and accommodating.

Don’t Neglect Holiday Happenings

Keep the holidays as stress-free as possible. Don’t neglect your family or obligations during the holidays. This only adds to your stress. Continue doing what comes with the holidays. Entertain, be entertained, buy and give gifts, and go to Christmas concerts and Grandmother’s house.

Selling your Brooklyn home during the holidays is possible. It can be done. Follow these tips and use this time of the year to your greatest advantage.

Are you ready to sell your home during the holidays? I’m ready to help! Call Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate at (718) 253-9600 ext.206 or email [email protected].

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 Charles D’Alessandro

Your Brooklyn Real Estate Agent

718-253-9600 ext. 206

[email protected]