INTEREST RATES

I am sure we all know that when interest rates go up then your mortgage payment will be higher. But, I am not sure the rapid rise in rates is fully understood by everyone and just how that might affect home values. So, the best way to explain is by comparison: ( these are general numbers and I am not a lender) In January when rates were around 3.5%: To purchase a $900,000 home, 20% down , rate at 3.5%, your payment -PITI ( principal, interest, taxes, insurance) would have been around $4,000 a month And now, In October when rates are around 6.8%: To pay the same monthly mortgage -PITI- of $4,000, with the interest rate at 6.8%, 20% down, the price of the home would have to be around $650,000! Wow! I am surprised that home values have not retreated more already. And the only explanation is that inventory is so low. And I am not sure when or why inventory will rise, but if it does then we could see the price of homes softening. So, what are some options for buyers or sellers right now? Buy down the interest rate, go with a variable rate loan, request help from seller, lower your expectations regarding what $4,000 a month might get you, and more. Thanks