The real estate market has been really good over the past few years.  Interest rates have been low, supply of homes low, and home prices have been increasing.   If interest rates increase, what happens to the monthly cost/payment?

1.  Buy a $250,000 home with an interest rate of 5%

Purchase Price: $250,000
Loan Amount: $237,500
Interest Rate: 5.0%
Principal and Interest: $1,274.95

2.  Buy a $250,000 home with an interest rate of 4%

Purchase Price: $250,000
Loan Amount: $237,500
Interest Rate: 4.0%
Principal and Interest: $1,133.86

The higher interest rate increases your principal and interest by $141.09 a month. 

Higher interest rates are costing buyers more per month then year ago Dec 2017. Plus, rates are expected to go higher in 2019. FYI, if rates go to 6% principle and interest payments would be $1,423.94 or another $148.98 higher.

Now is a great time to get out and start looking at homes.  Winter is a slow time for home sales in general, which means sellers are more motivated to sell and consider all offers.