Buying a home is a big decision and it takes proper planning.
We sat down with senior loan officer Brian Pawsat of Caliber home loans to talk about what he’s seeing for mortgage rates and down payments in 2018. We also picked his brain about the Northern Virginia real estate market.
Mortgage rates
They’re on the rise. We’ve all been talking about it for years but, it’s really happening. As of today’s post they’re over 4%. An increase in mortgage rates makes the biggest impact on buying power. In Northern Virginia the current average sale price is $500,000 with an average loan amount of $400,000. If rates increase just as little as 1% that would reduce buying power by $50,000 assuming the buyer wants the same monthly payment. Another way to look at it would be based off a $400,000 loan if rates increase 1% the payment would go up by $260 per month.
Down Payment
This is different for every buyer but, we want to make sure that if you’re considering buying a home this year that you know you don’t have to put down 20%. There are other options that are available. A 10% down payment is something we see frequently. It really comes down to each individual borrower’s profile. Selecting an experienced loan officer that you trust is important, they can show you what your options are and help you decide what down payment is best for you. Brian mentions in the below video that he has programs that enable as little as 3% down.
Waiting To Buy Until You Save More
This might not be the best plan. While you’re saving more money for a down payment home prices and interest rates are on the rise. Run the numbers with your loan officer to see if waiting is really the best plan. It could mean you’re missing out on building equity and that a loan will cost you more down the road in the form of a higher interest rate.
Stay tuned for part 2 – coming next week!