Purchasing Power

    Do you want to know why now is the best time to both buy and sell a house? The market may be on its way up, it might go down, or might stay right here for a while longer, but there is one simple reason you should buy or sell a house asap. Its call Purchasing Power.

    Purchasing power is the amount of house you can afford depending on the interest rate you get. Check out the stats we found:

    Purchase Price


    As you can see, if you want to keep your payment around $1400 per month (looking at principle and interest only), a slight raise in the interest rate could effect how much house you can afford.

    Why Purchase Price Matters When Buying a Home

    If you are using cash rather than obtaining a loan, it doesn’t matter. If you are like the rest of us, this is one of the biggest factors when it comes to the home you can purchase. When you get pre-approved for a loan the loan officer will determine the price you can afford. He/She does this by using the future potential payment of your home and your monthly debts. They want them to be less than 40-50% of your monthly income (depending on the type of loan).

    If you wish to qualify for a more expensive house there are three ways you can accomplish this: make more money, pay off debt, or have a lower interest rate. This can also work against you and cause you to miss out on a home. In the above chart if you qualify for a $1,400 a month payment the difference between a 3.75% interest rate and a 4.75% interest rate is $30,000 dollars of house.


    Why Purchase Price Matters When Selling a Home

    The goal of sellers is to get the most money for their home. To do this it is best to have as many buyers as possible. The cheaper the payment, the more people can afford the home. If you are trying to sell a $300,000 home and interest rates are at 3.75% it is less than $1,400 a month for potential buyers.  If interest rates go up just a quarter percent, those buyers looking to have, or are qualified for a $1,400 payment will likely offer $292,500 rather than a full price offer of $300,000.

    Also, buyers and sellers see the costs of the home differently. Sellers want the highest purchase price for their home so they can put the most money in their pocket. Buyers are looking to see if they can afford the monthly payment.


    Take advantage of low interest rates to get the best, lowest payment on a home or get the most money out of your home when selling. You can start by searching for homes or get your home’s value instantly.


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