With the government halting the purchase of Mortgage Backed Securities, and the inevitable increase in mortgage rates on the horizon, this is a question that many home sellers are beginning to ask. 

Well, I put together a simple spread sheet to work out the numbers and here it is:

Rate                                        4.5%                   5.0%                      5.5%                  6.0%

Loan Amnt                             200,000              200,000                  200,000              200,000

Term (yrs)                                 30                       30                          30                      30

Pymnt P&I                             1013.37              1073.64                  1135.58              1199.10

Difference                                  0                      60.27                     122.21               185.73

Loss in Purchase Power                0                  11,227.79                21,523.49          30,978.38

In other words, if a person qualifies for a $200,000 mortgage at 4.5% with a payment of $1013.37 and rates increase to 4.5%, that same payment will only get them a $188,772.21 home after the rate increase.

Shockingly, if rates increase from 4.5% to 6%, that same payment will only buy a $169,011.62 home.

Time, in our market, will definitely cost you money.  If you haven't hired an agent because you are worried about paying the fee, you may want to consider all of the relevant facts and see what you might lose if it takes you a while to sell.

Rod Moser, Associate Broker

Re/max Excel

2/4/2012