You’ve probably heard that now may not be the time for buyers to get into the market. The main reason for this is interest rates. 

If you’re considering buying a home in the next year, you may want to bump up that timeline. Right now, New Home Inc has some amazing interest rate promotions that allow you to afford more home than ever before. We’re talking about how interest rates affect your buying power and why you can afford to buy more home for less by taking advantage of today’s rates. 

How Interest Rates Affect Buyer’s Purchasing Power

It’s important to understand how interest rates affect how much home you can afford. After all, the interest rate you can secure will impact not just monthly house payments, but also your overall purchasing power. 

What is your purchasing power? It refers to how far your dollar goes. Purchasing power is the amount of house you can afford based on your available budget. There are all sorts of factors that go into this, like your down payment amount, debt, and credit score. 

However, interest rates play a huge role in determining the kind of home you can buy. The chart below shows how different rates affect monthly payments for the same loan amount.

The chart above doesn’t factor in any down payment amount on the home and focuses on Principal and Interest (P&I) monthly payments. If you’re interested to see how your monthly payment may change with these interest rates, you cancalculate that here. 

Paying Less for More Home

You can see how the buyer’s purchasing power changes based on what interest rate they can secure. We’re specifically looking at homes in the $400,000 range.

A buyer who secures a rate of 4.75% for their new home could save over $500 per month. Conversely, you could use the same monthly budget to increase your purchasing power. The charts below show how a buyer can take advantage of a MUCH lower interest rate and apply the same monthly payment to purchase as much as $97,000 MORE HOME. This is what we consider “Purchasing Power”

Today’s buyers can afford more home for the same monthly payments. You can extend these numbers to larger, more expensive homes depending on your budget. 

Comparing Today’s Rates to The Past

Today’s interest rates are historically average. While most recent memory of interest rates were in the 3% range, it makes it feel like today’s rates are incredibly high, however you can see for yourself what the historical rates have been. (Source)

Home Buyers Today Can Afford More Home for Less

The interest rate you secure plays a considerable role in determining how much home you can afford. Today’s rates are historically average, but crazy low compared to those those back in the ’80s and ’90s. 

If you’re looking to buy a home, now’s the time to do it. You can take advantage of New Home Inc’s interest rate reduction promotion and get back to historically low interest rates. You can even go beyond your expected price range because you can realistically secure a rate low enough to pay the same monthly payments on a bigger, more expensive home. 

See our community locations and quick move-in homes to find your New Home!