An Interesting Comparison
March 30, 2010
The Sun newspaper in its real estate section of Saturday, March 27 had an interesting comparison table in the advice column of Miguel Terrazas. In the table, Mt Terrazas makes a comparison between a $215,000 purchase price at 5% interest for 30 years versus a $193,500 purchase price at 6.5% for 30 years. The lower purchase price speculates that real estate prices might yet drop another 10% this year. The 6.5% interest rate speculates that interest rates will be rising.
Here is a Mr. Terrazas' table:
Price.........................................$215,000.........................................$193,000
Interest Rate..........................5%.....................................................6.5%
Monthly P&I Payment.........$1,133.26.........................................$1,200.89
Taxes (Monthly)....................$233.60...........................................$201.24
Insurance................................$70.00.............................................$65.00
Mortgage Insurance..............$96.75..............................................$87.08
Total monthly payment........$1,523.41........................................$1,554.21
Over the length of a 30 year loan, the difference is $11,401.20. This calculation does not mention the $8,000 tax credit if you meet the deadline for this benefit. It also does not take into consideration the interest deduction you might have on your annual income taxes.
Bottom line: If you are planning to purchase a home, waiting for further price reductions is probably not the best strategy. Finding a home that fits your lifestyle when you have made a decision to purchase a home is a better long term decision.
(Just a caveat - these are Mr. Terrazas' calculations and I have not reverified them.)
The Sun newspaper in its real estate section of Saturday, March 27 had an interesting comparison table in the advice column of Miguel Terrazas. In the table, Mt Terrazas makes a comparison between a $215,000 purchase price at 5% interest for 30 years versus a $193,500 purchase price at 6.5% for 30 years. The lower purchase price speculates that real estate prices might yet drop another 10% this year. The 6.5% interest rate speculates that interest rates will be rising.
Here is a Mr. Terrazas' table:
Price.........................................$215,000.........................................$193,000
Interest Rate..........................5%.....................................................6.5%
Monthly P&I Payment.........$1,133.26.........................................$1,200.89
Taxes (Monthly)....................$233.60...........................................$201.24
Insurance................................$70.00.............................................$65.00
Mortgage Insurance..............$96.75..............................................$87.08
Total monthly payment........$1,523.41........................................$1,554.21
Over the length of a 30 year loan, the difference is $11,401.20. This calculation does not mention the $8,000 tax credit if you meet the deadline for this benefit. It also does not take into consideration the interest deduction you might have on your annual income taxes.
Bottom line: If you are planning to purchase a home, waiting for further price reductions is probably not the best strategy. Finding a home that fits your lifestyle when you have made a decision to purchase a home is a better long term decision.
(Just a caveat - these are Mr. Terrazas' calculations and I have not reverified them.)
posted by shirley harry at 9:10 AM
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