The Cost of a Home is Far More Important than the Price

by kevinjones on September 22, 2020

in How's The Market

The Cost of a Home is Far More important than the price.  Realty Professionals 805-473-0300

Housing inventory is at an all-time low. There are 39% fewer homes for sale today than at this time last year, and buyer demand continues to set records. Zillow recently reported:

“Newly pending sales are up 25.5% compared to the same week last year, the highest year-over-year increase in the weekly Zillow database.”

Whenever there is a shortage in supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. CoreLogic’s latest Home Price Index reports that values have increased by 5.5% over the last year.

This is great news if you’re planning to sell your house; on the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. However, purchasers should realize that the price of a house is not as important as the cost. Let’s break it down.

 

20200922 KCM Share 300x164 The Cost of a Home is Far More Important than the Price

Realty Professionals 805-473-0300

 

There are several factors that influence the cost of a home. The two major ones are the price of the home and the interest rate at which a buyer can borrow the funds necessary to purchase the home.

Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.87%. At this time last year, the rate was 3.73%. Let’s use an example to see how that difference impacts the true cost of a home.

Assume you purchased a home last year and took out a $250,000 mortgage. As mentioned above, home values have increased by 5.5% over the last year. To buy that same home this year, you would need to take out a mortgage of $263,750.

How will your monthly mortgage payment change based on today’s lower mortgage rate?

This table calculates the difference in your monthly payment:20200922 NM Eng 1 The Cost of a Home is Far More Important than the Price

That’s a savings of $61 monthly, which adds up to $732 annually and $21,960 over the life of the loan.

Call Kevin Jones today to go over how you too can save money buying real estate today … 805-473-0300

Bottom Line

Even though home values have appreciated, it’s a great time to buy a home because mortgage rates are at historic lows.

With these low interest rates your buying power has never been this great in our life time!

Call Kevin Jones today 805-473-0300

Realty Professionals Round JPG The Cost of a Home is Far More Important than the Price

Realty Professionals 805-473-0300

 

 

 

 

 

 

 

 

 

Kevin Jones, Broker  Lic#01128892
Realty Professionals  Lic#01892221
805-473-0300

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Post by Kevin Jones

Realty Professionals 805-473-0300 791 Price Street Suite 191 Pismo Beach Ca 93449

Kevin has written 458 articles.



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