Many buyers focus on the price they wish to pay on a house, or they 'hold out' until the market hits rock bottom, but this can have such a negative impact on your overall financial situation if you are seeking financing.
The price of a home is the actual purchase price. The purchase price should be determined by the worth of the home which is determined by comparable homes that have sold within the last 6 months.
The cost of a home is the monthly mortgage payment. This includes principle, interest, taxes, insurance, and mortgage insurance. When determining your house budget, first figure what you can comfortably afford monthly and that will determine your purchase price budget. As illustrated below, in 2007 a buyer with a $1,000 monthly budget could afford a home priced at $154,972. A buyer with the same monthly budget in 2010, could afford a home priced at $192,813.
Year Price Interest Cost
1995 $121,021 9.3% $1,000
2000 $137,588 7.9% $1,000
2005 $161,558 6.3% $1,000
2007 $154,972 6.7% $1,000
2008 $152,611 6.85% $1,000
2009 $170,429 5.8% $1,000
2010 $192,813 4.7% $1,000
With the current interest rates, can you afford not to buy?
Call to find out what the rates are today. 801-694-3804.