Mortgage rates affect how much a buyer is willing to pay for a house.
The higher the interest rate, the higher the monthly payment will be for a given mortgage. For example, for a $100,000 mortgage at 2.625% interest, the principal and interest for a 30 year amortizing loan (the most common length of loan for a mortgage) will be a $402 monthly payment.
If the interest rate is 4%, the payment goes up to $477 per month. So, for someone who can only afford a $402 monthly payment, the most mortgage they can afford at 4% interest is $84,203, $15,797 less than when interest rates were 2.625%.
There is a reason that I am calling out those two specific interest rates.
The current best interest rate on Bankrate.com for a home purchase in Burleson, Texas is 2.625%.
However, economists are predicting that interest rates in 2021 will rise to 4%. This means that the amount of house that a home buyer can purchase will decrease in 2021.
Typically, cash buyers cannot afford the same amount in purchase that a regular home buyer can afford. Therefore, they tend to congregate at lower price points. Generally, there is not as much competition from traditional home buyers, because the home buyers want to buy as much house as they can afford.
While recently, we have seen house prices for houses for sale in Johnson County, Texas increase, as interest rates rise, we would expect that trend to slow or even reverse.
That means, in the near future, you can expect to see more competition of homes listed in the market around the value of your house, which will decrease your chances of finding a buyer who can buy your house quickly for cash and close within 7 days like we can.
So, if you need to sell your Johnson County, Texas house fast and see a cash buyer who can close quickly, do not wait. Take advantage of limited competition at your price point while mortgage interest rates are low.
If you need a cash buyer who can buy your house for cash, we use our own funds and can close in 7 days. Contact us and see how we can help you out.
You can also call us at (972) 808-6913.