Do You Still Qualify For That House?

So you started looking for a home a few months ago and you finally found the home of your dreams. You have your preapproval letter ready to go 'cause you're smart and you know that you need that to write an offer. The letter says you're approved for up to $500,000 and that's the list price of this house that you love. You're so excited. You call me, your realtor, and you say, "Andy, let's write the offer for full price, $500,000." Hold up. Let's check with the mortgage lender to make sure everything still checks out. Hey, Mr. Lender. Yeah, we wanna make an offer on 123 Main Street. The purchase price is $500,000. What? What do you mean we don't qualify?

Hey, it's Andy Mandel with ReMax and as I'm sure you've heard, interest rates have gone up this year, way up. I'm talking at least 1.5 to 2% since the start of the year. When you got that preapproval letter, the interest rate may have been in the threes or fours. Right now we're somewhere between 5 and 5.5% depending on your credit score and the day because interest rates change daily. For every 1% that interest rates go up, your affordability drops by 10%. That means that the payment on that $500,000 house at 4% is the same payment of a $450,000 house at 5%. If you were preapproved for your mortgage longer than 30 days ago and you aren't under contract yet, I would make sure you call your lender to see what your new qualifications are.