| Buying a home is very difficult because getting | | | | The answer is yes, current interest rates can most |
| approved for a loan in this economy is so hard. You | | | | definitely affect your borrowing power and here is |
| have to provide all kinds of paper work and bank | | | | why. Let's say the bank approves you for $200,000 |
| statements to show your income and debt and you | | | | and you plug that into a mortgage calculator to see a |
| also have to have a perfect credit score. Well there | | | | monthly payment of $1,135 with a 5.5% rate. Then you |
| are a few factors that can affect your borrowing | | | | see that interest rates go up 1% and your new |
| power and I'll tell you what they are right now. | | | | monthly mortgage payment amount is $1,265 which is |
| First of all, your borrowing power is the amount of | | | | $130 more per month. Well if you can only afford the |
| money you can borrow from the bank. Once you tell | | | | $1,100 per month then you'll have to lower the |
| them your gross income and all of your debt they will | | | | mortgage loan amount to get the mortgage payment |
| give you an amount that they think is fair. However, | | | | back to $1,100 so you can be approved. That means |
| that number is usually very low so I suggest finding the | | | | your new borrowing power amount would be closer to |
| number you think you can afford and then ask the | | | | $180,000 because at 6.5% it's a monthly payment of |
| bank if you can be approved for it. | | | | $1,137. Plug all of those numbers into an interest |
| Current interest rates are very important because the | | | | calculator to see exactly what I'm talking about. The |
| raise and lower your monthly mortgage payment. Use | | | | more bills you have per month the less you can |
| an interest calculator to see how much your mortgage | | | | borrow. |
| would cost per month. Then use the calculator again | | | | So the current interest rates have a huge impact on |
| with a higher interest rate and see how much it | | | | your borrowing power because of how much it |
| increases. Every quarter of a percent matters a lot | | | | affects your mortgage payment. Rates are negotiable |
| because you may or may not get approved because | | | | as well so make sure you make the banks fight for |
| of it. | | | | your business. |