Mortgage interest rates have seen historic lows in recent years, creating a favorable market for those in the market to buy a home. While interest rates aren’t the only deciding factor in making a home purchase, it’s important to understand they can affect your buying power especially when buying a home later in life.

We all know a lower interest rate can make a mortgage more affordable, both in terms of monthly payments and with the total loan amount. So, it’s important to keep your eye on climbing rates. If you’re buying a home for retirement, many believe buying it five to 10 years before you stop working could be beneficial. However, if rates are higher, this may not be an option for as many people. Regardless, when watching rates and deciding on the right time to buy, it’s wise to have 12 months of expenses in the bank as a reserve.

A change in the interest rate doesn’t necessarily translate to fluctuation in home prices, but they can affect the housing market. One big way interest rate changes affect the housing market is by affecting the amount you qualify for when applying for a loan. It used to be more difficult for retirees to borrow money due to lack of income. However, some lenders now allow retirement assets to be used to quality for a mortgage loan—making it easier for those entering retirement to afford their dream home in a dream community.