{"id":7361,"date":"2020-09-22T10:00:00","date_gmt":"2020-09-22T10:00:00","guid":{"rendered":"https:\/\/thezakariagroup.com\/the-cost-of-a-home-is-far-more-important-than-the-price\/"},"modified":"2020-09-22T10:00:00","modified_gmt":"2020-09-22T10:00:00","slug":"the-cost-of-a-home-is-far-more-important-than-the-price","status":"publish","type":"post","link":"https:\/\/thezakariagroup.com\/the-cost-of-a-home-is-far-more-important-than-the-price\/","title":{"rendered":"The Cost of a Home Is Far More Important than the Price"},"content":{"rendered":"
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Housing inventory is at an all-time low. There are 39% fewer<\/a> homes for sale today than at this time last year, and buyer demand continues to set records. Zillow <\/em>recently reported<\/a>:<\/span><\/p>\n “Newly pending sales are up 25.5% compared to the same week last year, the highest year-over-year increase in the weekly Zillow database.”<\/em><\/p>\n<\/blockquote>\n Whenever there is a shortage in supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. CoreLogic’s<\/em> latest Home Price Index<\/a> reports that values have increased by 5.5% over the last year.<\/p>\n This is great news if you’re planning to sell your house; on the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. However, purchasers should realize that the price<\/strong> of a house is not as important as the cost.<\/strong> Let’s break it down.<\/p>\n There are several factors that influence the cost of a home. The two major ones are the price of the home<\/strong> and the interest rate<\/strong> at which a buyer can borrow the funds necessary to purchase the home.<\/p>\n Last week, Freddie Mac<\/em> announced that the average interest rate for a 30-year fixed-rate mortgage was 2.87%. At this time last year, the rate was 3.73%. Let’s use an example to see how that difference impacts the true cost of a home.<\/p>\n Assume you purchased a home last year and took out a $250,000 mortgage. As mentioned above, home values have increased by 5.5% over the last year. To buy that same home this year, you would need to take out a mortgage of $263,750.<\/p>\n This table calculates the difference in your monthly payment:<\/a>That’s a savings of $61 monthly, which adds up to $732 annually and $21,960 over the life of the loan.<\/p>\n Even though home values have appreciated, it’s a great time to buy a home because mortgage rates are at historic lows.<\/p>\n<\/div>\n\n
How will your monthly mortgage payment change based on today’s lower mortgage rate?<\/strong><\/h4>\n
Bottom Line<\/strong><\/h3>\n