You have been living on a budget, saved for the down payment, met with your lender, signed a contract for the home you want to buy and and are all set, or so you think. You wake up in the morning to the news that mortgage interest rates have increased! What? How could this happen? What if I can no longer afford the house because rates increased? Ok, breathe slowly. Don’t do anything drastic!
Typically when interest rates change they don’t make dramatic moves overnight. Say for example the interest rate increased by .25%, going from 4% to 4.25% for a 30 year term. And your mortgage loan is approved for $250,000. The .25% increase will change your payment by $36/month or $432/year ($1.18/day). Remember, this dollar increase is for interest which is deductible so depending on your tax bracket, your ‘out of pocket’ amount is some amount less than $36/mo. or $432/yr.
So now that you have actually quantified what the .25% change in rates really means, and are breathing normally again, relax and know that you will be fine with the cost of your new home.