The Price Is the Same, But You’ll Save Over $100,000!

We’re seeing more and more research coming from quality sources proving that now is a very opportune time to purchase a home. No matter the type of scenario or ratio, be it income-to-mortgage payment, income-to-price, or the age old “Should I rent or own?” quandary, you’ll find that a home purchase now is quite a bargain as compared with all historical norms.

We know that sellers are most concerned with PRICE. But, buyers focus on COST, as that is most indicative of a home’s affordability to them. (What are the payments along the way?) Let’s take a look at cost…

As reported in the most recent S&P Case Shiller price index, residential home values are back to where they were in the beginning of 2003. Hey, that’s great! But hold on there, tiger… Now let’s look at the “cost” of money or interest rates. Undoubtedly, this makes the purchase of a home even more compelling.

In 2003, 30-year mortgage rates were at 5.88%. Today, they’re at 4%. Ok, so what. What’s a measly 1.88%? I agree, it doesn’t sound so impressive that way. Refocus now… That’s a drop of 32% in the COST of mortgage money! Ohhhhh!!! (By the way, ask anyone who’s been around for a while and they’ll tell you that, when rates were at that 5.88% level, historically that was pretty darn good as well. But now they’re even better… 32% better!)

Let’s look at the actual COST of a home taking this rate differential into account. We’ll use a $250,000 mortgage loan amount to illustrate:

So, your savings will be $285.30 per month… $3,423.60 every year…and $102,708 over the life of the loan! You bought the same home at the same PRICE, but it COST you more than $100,000 LESS!

Maybe this is why so many expert financial advisors are trumpeting that NOW is most likely one of the best times in history to buy a home. But, it all depends upon who you listen to, I guess.

Opportunity is knocking. Is anyone home?