Wednesday, May 1, 2013

Then & Now

Did you know that you can purchase a median price home today for a payment that can be lower than it was for the same home 30 years ago? Whats even more amazing is that when we consider that with inflation, that payment is much smaller percentage of average income than it was back then.

Let me give you an example, but please remember that these are for illustration purposes only. Prices are based on U.S. median average sales prices, rates are reflective of a 30 year fixed rate loan for 1981 and early in 2013, Principal and Interest payments are based on an 80% loan to value, taxes are based on a factor of 1.5% of the sales prices and insurance is based on a cost of $3 per $1000 of loan amount. Actual current rates, taxes, insurance, etc., can very at any time.

              1981 Home                                         2013 Home
Median Priced Home was: $67,000           Median Priced Home: $176,800
30 Yr fixed Principal & Interest: $824   30 Yr. fixed Principal & Interest: $645
Taxes: $83.75                                           Taxes: $221
Insurance: $13.40                                      Insurance: $35.36
TOTAL PAYMENT: $921                      TOTAL PAYMENT: $901
Income to Qualify: $36,855                       Income to Qualify: $36,056

The down side to this? It won't last. Interest rates are at a historic low, and once the economy improves or the Fed takes its proverbial foot off the gas pedal, mortgage rates will rise again.
Are you ready to take advantage?