When you’re in the market to purchase a home, one of the first things you’ll need to consider is how the current interest rates will affect your buying power. After all, the interest rate on your mortgage will play a large role in how much money you’ll ultimately end up spending on your home.
Luckily, there’s a simple formula you can use to calculate how the interest rate will affect your purchasing power. Just take the interest rate and divide it by 100, then multiply it by the purchase price of the home. This will give you an estimate of how much extra money you’ll be paying each year in interest charges.
For example, let’s say you’re looking at a $200,000 home with an interest rate of 4%. Divided by 100, that gives us 0.04. Multiply that by the purchase price and we get $8,000, which is how much extra you’ll be paying in interest each year.
Of course, this is just a rough estimate and your actual interest charges will vary depending on the length of your loan and other factors. But it’s a good way to get a ballpark idea of how the current interest rates will affect your purchasing power.
If you’re looking to buy a home in the near future, it’s important to keep an eye on interest rates so you can gauge how they’ll affect your purchasing power. By understanding how the current interest rates will affect your bottom line, you can make more informed decisions about when and how to buy a home.
Robin Costoplos P.A. is a Realtor with Coldwell Banker Vanguard Realty in Central, Florida. She specializes in helping buyers find their perfect home. For more articles like this, please visit her blog at www.lakepropertystars.com/blog/