Mortgage rates hit a stated 4 yr high today. The 30 yr fixed rate is getting closer to 5% than 4%. Why this matters;
$500k loan at 4.00% = $2,387 P/I
$500k loan at 5.00% = $2,684 P/I
$500k loan at 6.00% = $2,997 P/I
1% rise in rates on $500k loan costs an additional $297 more per month. Take rates back to 6% which is about where they were in 2005 /2006 and that monthly payment goes to $2,997 per month, or about $610 more per month.
With higher rates, investors need to put more down payment to cash flow investment purchases. Back in 2005, you needed about 30-40% down to cash flow some purchases. More recently investors have been able to cash flow with just 20% down.
In the big picture rates are not a scare
In the big picture rates are not a scare
The below chart shows mortgage rates heading south, which is higher for mortgage rates.
If you have deals in the works lock sooner than later has been the best strategy so far this year.
If you need help saving a deal please let me know.
C G
Caroline Gerardo
NMLS 324982
949-784-9699