February 10th, 2011 9:21 AM

Not long ago, people were enjoying the lowest interest rates in the past 50 years.  Many lenders were offering 4.75 for 30 year fix rates.  Check the interest rate today and what do you see?  Something like 5.125, maybe?

A simple calculation shows that for a $417,000 loan, your monthly payment will increase from $2,175 to $2,271.  If this $100 difference can't make you stop and ponder, let me translate the numbers in a different way.

Let's say you could be approved for a loan of $417,000 3 months ago when the rates were good, now you can only be approved for a loan that's less than $400,000.  Assuming you put down 20% of the purchase price, before you could buy any house under $521,250.  Now you can only afford a house that's under $500,000.

Wait, the rate hike is not over.  In fact, we are just starting to see its ugly head.  Of course, I am not trying to push anybody into anything, but if buying a house is in your plan, I think it's a good idea to buy sooner rather than later.  Before you know it, 5.125 will seem like a very good rate to many of us.

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