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Wednesday, October 19, 2016

Purchasing Power

How Historically Low Interest Rates Increase Your Purchasing Power. So what is Purchasing Power? Best to think of it in simple terms. Let's say your monthly budget allows for a payment of $1000 toward renting or a mortgage payment. When you shop for a house, your price range will be something that generates a monthly payment around $1000 including interest and taxes. The lower the interest rates, the more you can spend on a house and still stay within the desired mortgage payment. When interest rates go up - the payments on that very same house would be higher and to stay within your budget, you would need to finance less - or buy a lower priced home. You could also put down more money if you are able - and that could keep your payments lower. Unfortunately, not everyone is able to do that. Now is the best time to buy - low rates unlikely to last for ever. Great opportunity!