walla walla washington real estate

Feb 26, 2018

Updated Feb 28, 2018

When you are qualified for a home loan, it is based on a particular recurring payment. The mortgage rate is estimated (as well as other figures such as taxes and hazard insurance). Mortgage rate changes impact Washington mortgage pre-approvals because it affects the principal and interest part of the monthly payment. It is useful for home buyers to understand this since a change in interest rates may affect maximum purchase price.

Mortgage Rate Changes

Mortgage rates can adjust on a continual basis. Sometimes, they can even change several times on the same day. As a borrower, you will not know what your specific mortgage rate will be until you identify a home, know the settlement date, and lock in your mortgage rate. This can create some uncertainty, especially for price sensitive buyers. It is helpful to know what estimated mortgage rate was originally used to determine the pre-approval and to keep the pre-approval up-to-date. During times when mortgage rates are constantly or dramatically changing, contact your loan officer before preparing an offer on a property to verify that you still qualify for the purchase price.

Mortgage Rate Changes Impact Washington Mortgage Pre-approvals

Mortgage payments typically include principal, interest, real estate taxes, homeowners insurance, and mortgage insurance (if your down payment is below twenty percent). For this illustration, we will only include the principal and interest component of the payment. Assume that a buyer qualifies for a $300,000 home based on a 30-year payment period, 3.5% down payment, and 5% mortgage rate. The principal and interest payment is roughly $1554. If the mortgage rate increases by 0.5%, that same home buyer will then qualify for only $283,638. That is a significant change in the purchase price, which may be a different type of home. Conversely, if mortgage rates drop by 0.5%, the maximum purchase price increases to $317,843. The figures below detail the affect of other changes for this same buyer using a mortgage principal and interest payment of $1554:

Mortgage Rate Loan Amount Down Payment Sale Price
4.00% $325,523 $11,807 $337,330
4.25% $315,912 $11,458 $327,370
4.50% $306,719 $11,125 $317,843
4.75% $297,921 $10,805 $308,727
5.00% $289,500 $10,500 $300,000
5.25% $281,436 $10,208 $291,643
5.50% $273,711 $9,927 $283,638
5.75% $266,308 $9,659 $275,966
6.00% $259,211 $9,401 $268,612

Staying Informed

Be sure to ask your mortgage consultant regarding the total monthly payment amount for which you are pre-approved. From there, you can better determine the affordability of properties prior visiting them. Remember that there are a few variables to the total figure: mortgage rate, municipal taxes, property insurance, and mortgage insurance. If you intend to purchase a home close to your qualification limit, then it will be essential to keep an eye on mortgage rates. Your loan officer and real estate representative can assist you with this analysis and provide other information on how mortgage rate changes impact Washington mortgage pre-approvals.

Blaine Bickelhaupt, DB, Licensed in WA & ID
Blaine Bickelhaupt
DB, Licensed in WA & ID
Mission Statement: To be known for the way business is conducted, using ethical standards, and creating great customer moments. Time after time, Blue Mountain Realtors will build a foundation of trust, and professionalism that will create a unique experience. Blue Mountain Realtors, the region's leading real estate company, now doing business in Dayton and Walla Walla. Licensed in WA & ID.
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