In the past three months, mortgage interest rates have risen.  We knew the party couldn’t last forever, and now we are firmly in the realm of rates in the high 4’s.  What does that do to affordability?

For purposes of discussion, let’s look at rate sheets dated April 30, 2013, and rate sheets dated July 29, 2013.  For any given program, the interest rate is about 1% more now than it was then.

For those eligible to buy a home using the USDA program, a program which may no longer be available to us after September, here’s how it shakes out:

If the house costs $200,000, you would have had a monthly payment of about $1222 per month, and needed $3400 in closing funds.  Same scenario today costs $1353e per month and needs $5600e to close.  You’ll pay about $131 more per month, and need just over $2000 extra to close escrow.

Anyone using FHA to buy a house for $200,000 would have had a payment approximating $1338 per month, needing just over $10,000 to close escrow.  Today the payment is closer to $1450, and you’d need another $2200e to close.  You’ll be paying about $111 more per month in this scenario.

Let’s switch to refinance, and assume a perfect borrower with equity.  Their loan might have cost $912 for principal and interest payments, but today it’s more like $1043.  They’re paying an additional $131e per month due to the rate change.

Here’s how to put it all in perspective.  A review of the Freddie Mac data about “annual average rates” since 1971 shows that our current rates, as shocking as they feel today, are still better than any rate prior to 2010. Just five years ago, the average annual rate was over 6%.

Whether you’ve been considering buying or refinancing, our current market is still crazy good with regards to interest rate.  Make the decision now to investigate your options, while the gettin’ is still good.

Tammy Engel is your local Mortgage Advisor, and has been working for your best interest throughout California since 1990.  Contact her about purchase, refinance, or reverse mortgage at 661/822-REAL.