Most folks buy homes based on the monthly payment they can afford. Let's look at a quick snapshot considering two conventional loan scenarios as calculated on mortgagecalculator.org : one from two years ago with a historically low interest rate and a current scenario.
Home Price: $500,000
Down Payment: $100,000
Loan Amount: $400,000
Loan Term: 30 Years
Property Tax: $3,000/year
Home Insurance: $1,500/year
Interest Rate: 3% (those were the days)
In this scenario your monthly payment would be $2,061
You would payoff the loan in March of 2053 (As Delmar O'Donnell famously put it: "I'll only be 82")
Over the term of the loan you will have paid $207,110 in interest.
Your total over 360 payments (this includes taxes and insurance) would be $742,110.
So, what about now:
Interest Rate: 5.7% (pretty good for these days)
In this scenario your monthly payment would be $2,697
Loan payoff in March of 2053
Over the term of the loan you will have paid $435,777 in interest.
Your total over 360 payments (this includes taxes and insurance) would be $970,777.
A big big difference and probably a lot more than you might think looking at the price of the home. Remember these scenarios are exactly the same with the exception of the interest rate. Consider:
Big difference! Usually, the monthly payment consideration drives down sale prices, however, that has not necessarily been the case recently due to the low supply of homes for sale. Lot's of people are staying put. Why? Please note previous calculations.
Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we're the perfect resource for attorneys, agents, homeowners and lenders. Thanks for reading!