People often think of low interest rates as being a great way to save money on a home. After all, if the interest rate falls from 6% to 3%, that’s half as much interest you will be paying over the course of your loan term. However, people often forget that locking into a fixed-rate mortgage at a low rate (like right now, where rates sit around 3%), can also dramatically increase your buying power.
For example, if you had qualified for a loan amount of $350,000 at 5.5%, if that rate drops to 2.5% you now qualify for a loan of $500,000 for the same monthly mortgage cost. That can allow you to purchase a much more valuable home.
This is yet another reason why it is a great idea to speak to a loan officer at the start of your home buying journey. They can help you figure out how much you can afford to spend given the current market interest rates and other factors unique to your situation.
