The Fed's latest rate hike raised mortgage rates yet again.
It may not sound like a lot, until you learn how much more you might have to pay every month.
If you are housing hunting, you may need to look at a smaller house, if you have not already locked in a sub-6% rate.
A 30-year mortgage is now above 6 percent and close to 7 percent in some areas — the first time its been that high in 14 years.
But back then, homes were much more affordable.
Now the average home price nationwide is almost $400,000. Put that together with current mortgage rates, and thousands of buyers are finding themselves priced out.
Monthly payment shock
A new report from Time.com and Next Advisorsays "watch your monthly rate."
It says one year ago, with mortgage rates at 3 percent, a monthly payment would have been $1,350 for that home.
Now with rates above 6 percent, it says you will pay $1,900 a month, another $550 a month for the exact same house.
That's a 30 percent increase in payment.
And from the "doesn't that stink" file, home prices have not dropped much, even though that usually happens when rates rise.
The reason is that there is very little inventory, and very few people putting their homes on the market right now, since many of them are comfortably locked in to a low 3 or 4 percent mortgage rate.
That means buyers are looking at a combination of high prices and high mortgage rates, at least until one of the two come down.
Your best bet right now may be an adjustable rate in the 5 percent range, hoping for lower rates in a year or two.
A locked in 30 year mortgage at or above 6 percent may not be the best deal right now.
So look at alternatives so you don't waste your money.
___________
Don't Waste Your Money" is a registered trademark of Scripps Media, Inc. ("Scripps").
Like" John Matarese Money on Facebook
Follow John on Instagram @johnmataresemoney
Follow John on Twitter (@JohnMatarese)
For more consumer news and money saving advice, go to www.dontwasteyourmoney.com
