Miami real estate news and information

Cost vs. Price – Home Buyers Can Easily Understand the Difference

THE SINGLE MOST IMPORTANT THING FOR YOU AS A HOME-BUYER (BESIDES “LOCATION”) IS “HOW MUCH THE PROPERTY WILL COST” YOU.

COST is going to be determined by 2 things:

1) YOUR PURCHASE PRICE (and hence, whether you buy … or not) …  and

2) YOUR MONTHLY MORTGAGE PAYMENT (WHICH WILL BE DETERMINED BY YOUR LOAN AMOUNT AND THE PREVAILING INTEREST RATE).

This morning, I was analyzing the projected numbers (COSTS) for home-buyers  we are working with (young executives for whom we are putting in an offer on their first home). 

We are in the throws of negotiation on their behalf … and every penny matters

If you follow this blog, you have access to information and insights that are key to solid decision-making, whether you are buying OR selling.

The COST OF HOME OWNERSHIP IS NOT JUST ABOUT PURCHASE PRICE.

I thought I’d share with you, this morning “The costs of homeownership now vs. several months down the road”:

Based on current interest rates… and  projected interest rates  (which  according to The National Association of Realtors – NAR –  will increase over the next year and a half… well into 2012) the COST of home ownership will vary according to when you buy.  Below is a prediction of COST on a $400,000 mortgage loan,  based on where analysts predict interest rates will be:

Mortgage($400K) :    Projected Interest Rate:     Mortgage Payment (P&I):

2010  4th quarter            4.5                                 $2027

2011  1st quarter            4.7                                 $2075

         2nd quarter           4.9                                 $2123

         3rd quarter            5.1                                 $2172

         4th quarter            5.4                                 $2246

2012  1st quarter            5.6                                 $2296

         2nd quarter           5.8                                 $2347

As interest rates go UP (as experts are projecting), the COST of a house will increase significantly.  It would take another 10% drop in purchase price to equate to a 1% increase in interest rate.  Bottom line,  the COST to a buyer (month to month), is more important than PURCHASE PRICE.  

If you are thinking about buying or selling property in Miami please don’t hesitate to contact me. And if you are relocating, The Restivo Team networks and can refer and connect you to other Top Realtors across the United States and worldwide, anytime you need our assistance elsewhere.  We look forward to working with you!

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