Rise In Interest Rates Costing Home Buyers - NewsChannel5.com | Nashville News, Weather & Sports

Rise In Interest Rates Costing Home Buyers

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by Chris Cannon

NASHVILLE, Tenn. - It will cost you more to buy a new home after a spike in mortgage rates over the last few weeks.

Rates had hit all-time lows in the months leading up to the increase. Now, a 30-year mortgage will cost you between 4.50% and 4.75%, up from 3.40% in April.

"The market's improving; both stock market, the real estate market and the bond market which are driving those interest rates a little bit higher," according to Robert Creecy from ReMax Fine Homes in Nashville.

Creecy said every time the mortgage rate increases, it costs home buyers more money.

"In the last two weeks, with interest rates going up 3/4 of a percent, that brings one's qualification down 5 to $10,000 from what they could normally qualify for, so basically they're getting less house, for the same payment," Creecy said.

First-time home buyer Travis Case found that out the hard way when he put a bid in on a house in East Nashville, at a great rate.

"We had it looked in at 3.5%, with the loan, but then the house we had, we kind of had a bid off. There were three people going for it," Case explained.

It took two days before he won that bid off, and his offer was accepted by the seller. In that short amount of time, his interest rate increased by more than a percent.

"It was frustrating, but my parents were telling me this is still a good rate to have it at," Case said.

Case is a sophomore at Belmont University and will have two roommates living with him when he moves into his home.

"I'm able to gain equity in the property by having rent being paid, and by me not having to pay much, which is a blessing," Case said.

Even if it comes at a slightly higher price than it would have, if there was not so much competition for his first home.

"It's a percent that's going to cost some money in the long run, but still I'm able to make a good investment," said Case.

Creecy said the bottom line here is that rates could go even higher.

"If you're on the fence, thinking about a possible home purchase, now would be the time," according to Creecy.

The rise in mortgage interest rates is also making it less appealing for homeowners to refinance their current loans.

Email: ccannon@newschannel5.com
Facebook: Facebook.com/NC5ChrisCannon
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