Buying a home? How rising mortgage rates might keep you there awhile


StraighTalkAboutMortgages broker Tom Vanderwell makes an interesting point in a video recently posted on his website.

He recently asked a customer planning to move in three to five years this question: "If, three to five years from now, mortgage rates are 7, 8, or 9%, will you still move?"

Here's why it matters: let's say you buy a house now for $250,000, and put down $50,000. With a mortgage at 5%, your monthly payment will be $1097.75.

But let's say you decide that you want to move to another $250,000 house five years from now (i.e. you switched jobs), after inflationary concerns and the end of artificially low rates have driven interest rates higher. Let's say that in five years, rates are up to 8%. All of a sudden, your mortgage payment rises to $1467.53 -- your mortgage expense has risen 33%, even though all you did was trade one $250,000 home for another $250,000 home.