Home Buying Power Now And Before
When you take into account home buying power now compared with that in 2008, the differences are pretty astonishing. Not only have home prices come down considerably , but the record-low interest rates make buying real estate very affordable for those that can qualify for mortgage loans.
While the market really started slipping in the summer of 2007, home prices in Utah didn't really start declining until 2008.
If you werebuying for Real Estate in Salt Lake City Utah in July of 2008, the median list price of those homes was $309,000. A common rate for 30 year fixed mortgages of primary residences during that time was around 6.65%. {For a buyer purchasing the median home with a $44,000 {down payment}, this would leave them with a principal and interest payment of $1,701~For a home buyer buying the median home with a $44,000 down payment, this would leave them with a principal and interest payment of $1,701}. That time was definitely a good time to buy
Examine that with market conditions now:
The existing median list price of Homes for Sale in Salt Lake City is $214,000. And, mortgage interest rates can be obtained at 4. If a buyer placed the same $44,000 down payment on the median house, at the going interest rate under these conditions, their payment would be just $836 a month.
That's less than half as much as the monthly payment under the 2008 scenario.
If a home buyer pay his mortgage off at terms over 30 years, then he would paid a total of $347,434.49 in interest. They would have paid just $131,067.21 in the second scenario. That's savings of more than $216,000 in interest over the life of the loan.
A 15 year fixed mortgage would be more attractive to a home buyer in today's market condition because of the lower home prices and interest rates. The home buyer would have a monthly payment of $1,215.30 with a 15 year fixed mortgage at the current median price, and the same $44,000 down payment. Yet more low priced compared to the 30 year fixed payment of 2008, but paid off twice as fast. With a 15 year fixed mortgage today, the buyer would save nearly $300,000 in interest compared with if they would have bought in 2008.
Now this scenario has flaws, and people rarely actually bought homes priced at the median price, but {compared with |in contrast} two years ago, Homes for Sale in Salt Lake are very reasonably priced.
Posted at 12:15PM Nov 04, 2010 by Cornerstone Real Estate in Real Estate |