As mortgages go up will you be able to afford to buy?

With mortgage rates at their highest levels in a few years and only rising, one must wonder what effect this has on the affordability of homes. Will rising rates knock you out of the real estate market?

According to a CNN article, "Rates have a direct affect on affordability. For example, a jump in interest rates from 6 percent to 7 percent on a 30-year loan adds about 10 percent to a monthly mortgage bill. A homeowner who financed a loan of $200,000 at 6 percent would pay about $1,200 a month. At 7 percent, the bill would come to $1,330."

As mortgage rates go up, buying power goes down. Do you need a mortgage broker before rates go too high?

While some might hope that rising rates will also deflate home prices in the hot Southern California market, it could take months or even years of high rates and a soft market before sellers give in to price reductions. Some markets might never see price reductions.