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How Interest Rates Impact Condo Search

At Southwest

Station Condominiums, we’re proud to offer condos for sale throughout Eden
Prairie at your convenience. Our wide selection of options comes with numerous fantastic amenities, from great landscaping to a fitness
center and a professional homeowner’s association.

In some cases, those looking at our new condos for sale will require financing in the
form of a mortgage to make this purchase. If you’re among this group, how much
should the interest rate available to you factor into your choice to buy or not
buy? Let’s look at some of the basics, both on interest rates themselves and
also on other important factors to keep in mind.

Interest Rate Basics

Mortgage interest rates tend to hover in what appear like low ranges, but when you
extrapolate them out using large dollar figures, they can begin to look
imposing. Consider a 30-year, $100,000 mortgage you’ve qualified for at a 4
percent interest rate – your monthly payment in this
situation would come out to $477. But if that rate was suddenly 5 percent, not
four, that same $477 amount is only enough to get a mortgage for $89,000. If
the rate jumps to 6 percent, it’s not even enough for an $80,000 mortgage.

Does this mean a rise in rates as you’re searching should convince you not to buy a
condo? Absolutely not, at least not if this is the only element of the search
you’ve considered. There are several other important financial factors that
also play a role.

Other Considerations

· Paying cash: If you can put down a large amount toward the condo up front, your
interest rate will have a smaller and smaller effect on purchasing power.

· The rental market: If the rental market is expensive, it often makes more sense to
buy.

· Appreciation and depreciation: Do some research on indicators of whether a condo you buy is
likely to rise or drop in value over the term of your loan. If the neighborhood
increases significantly in value, you could be in for a big windfall.

· Refinancing: If you buy at a high rate that goes down years later, you often have the option
to refinance and capitalize on the new lower rate. Know that you aren’t
permanently stuck at a given rate for the entire life of the loan, at least not
necessarily.

For more on
how interest rates play a role in your condo search, or to learn about any of
our options available, speak to the pros at Southwest Station Condominiumstoday

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