Shocking Home Buyer Affordability Concerns: Comparing 3% vs 7% Interest Rates

How Much House Can I Afford? Here's What the Numbers Say

The higher the interest rate, the more expensive your monthly mortgage payment will be.

We'll compare the prices of homes at the beginning of 2022 when the interest rates were 3% versus at the end of 2022 when they rose to 7%.

For a $400,000 home, with a 20% down payment, 2% closing costs, and a 30-year fixed mortgage at 3%, your monthly payment (principal and interest only) would be $1,350 per month.

But at a 7% interest rate, that same home would have a monthly payment of $2,130, an increase of $780 per month (58% increase).

The Home Price Correction We Need

If we achieve a 5% interest rate and the home that's currently priced at $400,000 drops to $320,000, a monthly mortgage payment at 20% down would make the monthly payment $1375. That's significant savings and allows more potential homebuyers to afford a home. (Or at least keep the same affordability vs a 3% interest rate).

Read more, and watch my full 8 minute video analysis, by reading on my websites:

https://flatfeemlshouston.net/shocking-comparison-of-3-vs-7-interest-rates/