I just read another doom and gloom article. It, of course, depends on the hour, the day, the author, the locale, and more.....as to whether I read a doom and gloom or something more upbeat about Real Estate.
Earlier in the day I received an update about Interest Rates on mortgage loans.
So, I did a few calculations that I am going to jot down, share, and summarize.
For simplicity, let's use round numbers and a conforming conventional loan ~
Home price $350,000
Current rates 4.00%
20% down payment.
Monthly payment = $1336.70
Finance charges over the 30 year loan life = $201,235.49
Total cost of home = $551,235.49
Next example ~ let's say with a 10% drop in value that some say may still happen.....
Home price $315,000
Future interest rates 5.00% (that's a guess, as of course, we have no idea!)
20% down payment.
Monthly payment = $1352.79
Finance charges over the 30 year loan life = $235,004.67
Total cost of home = $550,004.67
And another example ~ with a total of 50k drop.....eeeck!
Home price $300,000
Again guestimating a future interest rate 6.00%
20% down payment.
Monthly payment = $1438.92
Finance charges over the 30 year loan life = $278,012.58
Total cost of home = $578,012.58
I don't think I have to summarize this that thoroughly ~ I believe it shows you how much you save on a home price can frequently be eaten up on the interest rate you are paying. I've been involved in Real Estate for over 30 years, as a Realtor for over 10....I've never seen rates where they are right now for a 30 year fixed mortgage...never. And, I do believe that will go up more likely than going down much further.
You can do the math, as they say....and do I even need to mention the tax benefits of home ownership?
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