Posted at: 06/20/2013 10:31 AM
Updated at: 06/20/2013 6:31 PM
By: Berkeley Brean
For a while, interest rates held steady at three percent. But just as the home buying season picks up speed, so are the interest rates. Interest rates are going up just one percent, but that can cost you thousands of dollars.
News10NBC found that for an average home, around $100,000, that one percent would add up to about $20,000 on a 30 year mortgage.
So what does this mean for people who want to buy a home right now? It means you're probably going to pay more than your friends who bought their home last month. But historically, it means you're still getting an unbelievable deal.
Debbie Campanella, Remax Group, said, “So anything in the $100,000 range seems to be moving quickly, yeah i agree with that.”
Debbie Campanella and Amy Bell know what they're talking about. Bell is one of the top mortgage brokers in Rochester and Campanella is a top real estate broker.
News10NBC Berkeley Brean asked, “Are you advising clients better buy now before it goes even higher?”
Campanella said, “I'm a real estate agent, I'm always telling people to buy now.”
But now is twice as expensive as this time last year.
Campanella said, “They could get a 15 year mortgage for 2.8 which is just unheard of, but now they're going to be looking at the 4's, which is still really nothing.”
But nothing is still something. With just a single percentage point increase on an average $100,000 home and 30 year mortgage, the buyer will end up paying $20,000 more over the life of the mortgage.
Brean said, “Is that good or bad?”
Bell said, “It depends on how you look at it. In my opinion, a whole point in an interest rate is not going to, in my professional opinion, deter someone from buying their property. Rates are still good.”
But any increase means more money. In a Twitter conversation with Brighton Securities George Conboy, Conboy said one percent is a huge deal.
Remember the average $100,000 or 30 year mortgage? One percent is the difference between paying $421 a month to $477 a month.
The other thing we learned is don't complain about this to people who bought their house years ago.
Campanella said, “My mortgage rate is 6.5 so to me anything in the range of 4 or 3.5 is a gift.”
So what if you're already in the process of buying a house or you bought one in the last month? Here's a couple of things you should do:
-Check with mortgage broker to make sure your interest rate is locked in. You want to make sure you're getting what you signed up for.
-And ask about something called "points" you can buy when you're getting your mortgage. They can lower your rate.