If I asked a client that question, I might feel like a car salesperson. In an effort to save money and avoid the haggling process, I purchased my MINI Cooper with cash. Although, when purchasing a home most people will seek financing rather than pay cash. So thinking about the price of a home in terms of the “monthly payment” is not a bad idea.
As I have mentioned in earlier blogs, homes are more affordable today than at any time in recorded history. The reason homes are more affordable today is a combined result of low home prices and mortgage rates. Every time mortgage rates change, a buyer can either “afford” a more expensive home or see their mortgage represent a lower fixed cost. A 1% change in mortgage rates is equal to about a 10% difference in price in terms of payment. If you are waiting for housing prices to hit rock-bottom, you might just miss the bus by not taking advantage of record low interest rates.
Here is another way to make a home even more affordable. Adjustable rate mortgages (fixed for 5-7 years) can be 1%-to-2% lower than a 30-year fixed rate. Buyers planning to sell within 5-7 years don’t need a 30-year, fixed-rate loan and can save thousands on house payments by taking advantage of these products.
Learn more! Check my blog regularly for up to the minute Park City real estate advice.