Although, so many factors can affect the sale of a home, one of the most important and pertinent ones is the effect of the economy, economic climate, and the overall rate of interest on the real estate market! After over a decade, being a Real Estate licensed salesperson, located in the State of New York, as well as many yearsworking in crucial positions in both finance and business, positions shops for sale in Islamabad, I believe, both potential home buyers, as well as homeowners, seeking to sell their homes, should understand certain key factors that could affect the outcome on the selling process. This article will attempt to briefly examine, analyze and consider 4 of these elements.
1. The impact of changing interest rates on mortgages:Most buyers take advantage of a 30 year fixed rate mortgage, in order to purchase their first home. Because for most people those who own a house, represents their single largest financial asset, it is crucial to understand the way an increase or decrease, in interest rates affects the cost of living each month. Rates on mortgages are related to interest rates in general which makes them is an important factor to be aware of and be aware of. A general, rule - of thumb an increase of one percent in the interest rate of a mortgage, produces approximately, a $60, per month, per 100 000 of mortgage, which is an increase in cost! So, for instance the case of an individual who has a $500, 000 mortgage, if rates increase by one percent, the monthly cost is increased by about $300. While we've had historically low rates for the past five years, and are still experiencing low rates, they have grown by nearly one percent. For example, if rates increased from 3.5 percent to 4.5 percent, we'd see the same scenario however, if you believe that the Federal Reserve, raises interest rates as they have declared, they will raise rates to increase rates to 5.5 percent, it would result in a substantial increase, especially for prospective homeowners.
2. Qualifying for mortgageOne of the main factors used by lenders to determine if someone is eligible for a particular mortgage is the relation between monthly income and expenditures. Therefore, as rates increase and homebuyers are more likely to qualify, some may not be eligible to purchase as much home, as they did in recent times. How might this affect pricing?
3. The strength of the house marketWe witnessed an historic increase in the price of homes that are sold. This is due in part to demand and supply as well as the current Sellers Market as there are more potential buyers than houses, available. If the impact of rising rates, creates fewer potential home buyers, the outcome may be less demand, and the potential of home prices falling!
4. New builds/ construction:When interest rates increase the cost of Construction Loans, increases, and, consequently, either reduces home construction, making it even more difficult and costly. This could cause builders to either accept lower profit margins, take more risk, or abandon, for a while, their new projects.
Take note of anticipated interest rates, as they have a major impact on numerous aspects of real estate. If one is well-prepared to proceed, it is done in a more well - considered manner!
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