Homebuying January 10 2020

How do Interest Rates Affect Purchasing Power?

Purchasing power refers to the price of the home you can afford based on the budget you have available. Naturally, if interest rates start to increase, you will not be able to afford the same home on the same budget. In a nutshell, you will be paying more for the same home if the interest rates rise.

How do Interest Rates Affect Purchasing Power?

The impact of purchasing power makes it important to jump on your dream home when interest rates are low. The mortgage interest rate determines your monthly payment, as well as the total lifetime cost of your mortgage. Until you lock in your interest rate, the current rates being offered may change due to market fluctuations. Locking in your rate when you deem it appropriate will allow you to properly budget for the future costs of your new home!

Just how powerful are interest rates when it comes to purchasing power? As you can see in the chart below, the higher the interest rate, the higher the monthly payment. Meaning the less house you can afford. “A 1% point drop in rates — such as from 4.5% to 3.5% — leads to a monthly savings of $167 on a $200,000 mortgage,” says Lawrence Yun, chief economist for the National Association of Realtors.

*This chart is for informational purposes only. Sample rates and APRs are based on interest rates and terms available as of 6/07/2019, factoring in prepaid finance charges (per diem interest and closing fees). Interest rates could vary or change without notice; buyer is subject to qualifications for specific loan terms, occupancy, down payment, credit and underwriting requirements, and/or investor program guidelines. This is not an offer to enter into an interest rate or discount point agreement and any such agreement may only be made in writing, signed by both the borrower and lender.

You can use our mortgage calculator to see the incredible effect of interest rates for yourself. As you slide the interest rate higher, you can see how much your monthly payments would climb to pay off the cost of the same home.

Mortgage rates have been near record lows over the past few months. That means many prospective homebuyers can likely afford a more expensive home than they previously thought. With Eagle Home Mortgage, get prequalified for your dream home and find out what your purchasing power is!

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January 10 2020

How do Interest Rates Affect Purchasing Power?

Purchasing power refers to the price of the home you can afford based on the budget you have available. Naturally, if interest rates start to increase, you will not be able to afford the same home on the same budget. In a nutshell, you will be paying more for...

Read More

December 27 2019

4 Refinancing Myths BUSTED

Don't let common misconceptions keep you away from refinancing your mortgage. Consider the 4 most common myths and why they should be kicked to the curb.

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Decorating Your Home for the Holidays on a Budget

You don’t have to skip decking your halls this season just because you’re on a budget! The holidays can already be an expensive time for many, so we like finding stress-free and inexpensive ways to get into the holiday spirit. Here are some tips for...

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Homebuying Hurdle: Debt

Many believe that their amount of debt will be an instant hurdle when qualifying for a home loan. This is not always true. The amount of your debt will not necessarily be a red flag to lenders, but your debt-to-income (DTI) ratio might be. This number is one way...

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12 Days of Savings

From family meals, travel, gifts, and social outings, the holidays are one of the most expensive times of the year. We have compiled some tips to help you spend mindfully during this holiday season.

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November 27 2019

Market Update: FHFA Announces Loan Limit Increases

The Federal Housing Finance Agency (FHFA) has announced that the conforming loan limits will be increased to $510,400 in 2020

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November 20 2019

Why Interest Rates Aren’t the Only Thing That Matters

Shopping for the lowest rate when looking for a lender could be a detriment to your homebuying experience. There is much more that goes into a positive homebuying experience than the mortgage price tag. If you place a value on communication, timeliness,...

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November 14 2019

Homebuyer Solutions Group Success Story

Marylynn M. and her husband successfully improved their credit scores while enrolled in Eagle Home Mortgage’s Homebuyer Solutions Group (HBSG) program and were able to purchase their dream Lennar Home after graduation. We spoke to HBSG Credit Specialist,...

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November 07 2019

Home Organization Tips to Spark Joy

There is a proven correlation between home clutter and stress. Organizing your abode is a quick and relatively easy way to bring more joy (and extra time) to your life. Here are some home organization tips to help you spark joy!

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