Among the most personal decisions most Americans ever make is when and how to buy a home, but watching the details of that purchase can make a big difference in the long run.
Houston-based Kenya Burrell Van-Wormer, a co-founder of Equity Angels, says a close look at mortgage rates can be intimidating since a tiny rise of just a few tenths of one percentage point can mean a difference of thousands of dollars in buying power. Add to that the way such a rise in rates can affect a homebuyer's monthly payments, which can also reflect the cost of the mortgage loan.
And while high interest rates may scare off some potential home buyers, the decision regarding exactly when to buy is a very personal one, she points out, because a home can still be affordable at current rates and it's never too late to prepare for a future home purchase by saving money for down payments.
"And a good example for everyone to understand is, a $3,000 monthly budget now buys a $442,500 home at seven-percent -- versus a $475,000 home at 6.11%.
"The interest rate has an impact."
But putting off buying until rates drop can be very tricky, Burrell Van-Wormer says, because there's certainly no guarantee that mortgage rates will drop significantly any time soon, and that could take years.
Buying a home should be a personal decision based on each person or family's unique needs and desires, but it's important to remember that a home is also an investment that builds equity, as opposed to paying rents, she adds.