When you go online for the purpose of finding a new home among the listings in Ladera Ranch, there will be a number of search criteria items that you will enter. One of the main ones will be, of course, your price range or budget amount. If you’re a serious buyer rather than just a looky-loo, you probably have a budget and that budget dictates the homes that you are in a position to give serious consideration to. And, like 67 percent of house-hunting Americans, you’ll need a loan for financing your home purchase and therefore the resulting monthly mortgage payment is your main concern.
Here’s an example. If you are an average home buyer in America and let’s say your annual income was somewhat higher than $55,000, which is the median annual income in this country. So, for this particular example, it’s $60,000. You should then apply the standard rule of all lenders, which is that no more than 28 percent of your income should go to your housing budget, and then your max mortgage payment should be $1,400 per month.
So, let’s say you found an excellent buying opportunity and it’s a beautiful new home selling for $286,000, which is the median price for a new home in this country. You saved up a 20 percent down payment, which is just enough to make a dent in the selling price, thereby qualifying you for median mortgage interest rates, which were 4.05 percent in July 2015. The insurance required by the bank plus annual taxes totaled $3,000 and that adds $250 per month. This means that, on a 30-year fixed rate mortgage, your monthly payment would be $1,350 and that’s $50 under budget.
It’s not necessary to be a devoted number cruncher to have an interest in what direction mortgage interest rates in Ladera Ranch are heading. Most people don’t think that spreadsheet calculations are their idea of a good time. But, most of us are concerned about mortgage interest rates and the main concern that most people have stems from recent talk regarding a raise in the target rate for federal funds by the Federal Reserve.
That would surely initiate a rise in Orange County mortgage interest rates, as well as everywhere in the country. On the above example, the insurance and taxes would stay the same, however what if the mortgage interest rate goes up by just one percent? That would take it to 5.05 percent, which is still less than the historical average. However, the monthly payment for the same home in the example would then be $1,486. Then, instead of being $50 under budget, it would be $86 over. In spite of the fact that certain lenders might take into consideration other factors, making the loan viable, the fact is that the additional one percentage point could end up costing better than $1,630 annually and that equates to almost $50,000 more over the life of your loan.
The reality of this situation is the fact that practical home shoppers can currently be considering Ladera Ranch properties that are in a higher price range than they will be able to if they wait until the post-mortgage-rate-rise. This means that the real estate market is so much more vast than it could be at a later date. In addition, the August mortgage interest rate in Ladera Ranch actually fell below the 4.05 percent July average, which is another excellent reason for giving Amy Sims Team a call. Together we can find you that perfect property before interest rates climb.