Inflation and high interest rates add pressure to prospective homeowner budgets

A fraction of a percentage point could cost you thousands over the life of a mortgage

InvestigateTV - The Federal Housing Finance Agency (FHFA) reported In October that housing prices were up 11.9% from August 2021 to August 2022 and financial experts predicted prices will remain high even if growth slows.

Along with the increase in home prices, the Consumer Price Index sits at 8.2%, which meant consumers are likely paying more for groceries, utilities, and other expenses.

Elizabeth Renter, a data analyst with NerdWallet, said all the increased prices need to factor into your calculations if you’re trying to figure out how much house you can afford.

“Make sure you’re not just thinking about how much can I afford on my house payment, but how those other things have played into how much you’re spending every month,” advised Renter.

Renter explained that inflation means mortgage rates are high and are likely to go higher. As the Federal Reserve continues to raise interest rates, those increases can have a big impact on how much you pay each month.

A small fraction of an increase in interest rates can add thousands of dollars over the life of a mortgage and make your monthly payment larger.

Renter urged potential home buyers to look closely at interest rates and revisit their housing budget because looking at the big picture of your finances could save thousands in the long run.

Rachel DePompa

Rachel DePompa

Rachel DePompa is NBC12's On Your Side Investigator. Before joining WWBT in March of 2008 Rachel worked in Roanoke, Bristol and Harrisonburg.