When doing research to determine what one can afford, planning on interest rate rises in the future should be a consideration. Although interest rate rises affect home buying power, it may not be as much as many think. Lenders use several parameters to determine mortgage rate like:
- Current prime rate
- The ammortization period
- Type of interest (fixed, variable)
- Credit history
Also, for pre-construction homes and condos, owners often earn equity before they even take possession.