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What Can You Afford in Today's Market?


Here’s how interest rates affect how much house you can afford.

 
How much home can you afford with the present low interest rates? 

This week, I had a client interested in a property that was valued at $500,000, which she’s been approved for, and she’s putting 20% down. With the current interest rates at 2.875%, her monthly payment would be $2,285. A few years ago, that same property valued at the same price with a 4.5% interest rate would have been $2,652 per month, which is a difference of $367. As you can see, an increase in interest rates is the most crucial thing to consider when buying a home right now. 


"Locking in a lower interest rate is the best decision, even if you have to go a bit higher in price."

 
If we took this example a step further, and now the property is valued at $550,000 with that 2.875% interest rate, her monthly payment would be $2,513. Now let’s say she decided to wait a while; she didn’t want to get into a bidding war and drive up the price, so later the home is worth $450,000 but interest rates rose to 4.5%, her payment would climb to $2,387, which is still more expensive for her with the $50,000 drop in price than if she would have bought the house with a lower interest rate. In today’s market, locking in a lower interest rate is the best decision, even if you have to go a bit higher in price. 

If you have questions or comments about interest rates or anything else, feel free to leave them below or call us. We look forward to helping you. 

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5 Questions to Answer Before Selling Your Home


Here are five questions that every home seller should ask before listing.
 
Low inventory and interest rates are causing absolute craziness in our real estate market. If you’re thinking about selling your home, you should hold off until you’re able to answer all five of these questions confidently:

1. Where are you going to go? Are you going to sell and buy another home right away? Are you going to rent instead?

2. Are you ready for the showings? We can’t have open houses, so we’ll have to stack showing appointments on top of each other. Within the first seven days that your home is on the market, you could have up to 70 people coming through the house.

A real estate professional is the best hire you can make.

 
3. Is the house ready? You might need to make some renovations. You’ll need to do some deep cleaning and decluttering and possibly some staging before listing the property.

4. How will this affect my finances? Talk to your CPA, accountant, or tax person because if you have a large gain, you’ll likely have a larger tax bill. Know this info ahead of time and run the numbers.

5. Are you ready to hire a Realtor? A professional is the most important person you can hire. They will be able to negotiate, handle the contracts, do disclosures, and deal with any problems that might arise. You’ll be better off if you hire a professional.

These are the five big questions every home seller should be asking before they list their home on the market. If you have any questions for me, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.
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Location: Mission Viejo, CA, USA
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