Rising interest rates can be a bad thing for several reasons:

• Low interest rates are more beneficial for buyers than low home prices as far as affordability.
• Rising interest rates mean higher home costs.  The higher interest rates mean higher monthly mortgage payments, which means people can’t afford as much home. Combine this with rising home prices and the homes people can afford to buy are now changing.
• Some people may no longer be able to afford to buy a home. With the increasing rates and home prices, some marginal buyers will be knocked out of the market.
• Less people will be able to refinance, so those homeowners that are still underwater, and have not refinanced will not be able to get the great low rates that may help them keep them in their homes.

Mortgage rates are heading up as are home prices.  See how mortgage rates have changed this year so far and how they are predicted to increase. Take a look at the infographic below from KCM Blog.

Why own a home? Need some good reasons to buy your own home? Take a look at this short list.

• Prices are still fairly low and so are interest rates. They say prices will increase by at least another 5% in the next year and interest rates may also rise, so get in as early as you can.
• Rent is normally a variable that is only set for a short amount of time and seems to always increase. If you buy your own home and get a fixed rate mortgage, your “rent” will be the same for the life of your mortgage.
• Rather than paying someone else for your place of residence, you are paying yourself with your mortgage payments. You can look at it as a form of savings plan as the equity builds in your home.
• Mortgage interest is still a tax deduction. If you buy soon, you get a double bonus with the low interest rate and being able to use it as a deduction.
• Paying your mortgage on time every month as well as your other bills will help get you a great credit score.

If you are on the fence about buying a home, now is the time to get off that fence and do it while homes are still a great deal!

RE/MAX CEO Margaret Kelly was interviewed on Fox News about the current real estate market in the US. She talks about why inventory is so low and when it may increase, who is buying homes now and why, what about lending standards and the interest rate and more. It is a very informative piece on the “state of the housing market”.