Why Take Advantage of Great Interest Rates in Today’s Real Estate Market?
Friday, July 16th, 2010Take Advantage of Great Interest Rates in Today’s Real Estate Market
By: Jeremy Williams of Keller Williams Realty NE
Never has it been a better time to buy a home than in today’s real estate market. This is especially true for move up buyers in markets that have softened because of the national economic financial crisis. For example:
The value of homes in your market has dropped 3%.
Your 2,300 sq. ft. with 3 bedrooms and 2 baths that you could have sold two years ago for $180,000 now can only sell for $174,600.
You decide you need more space!
A 3,500 sq. ft. home with 4 bedrooms, 3/1 baths and 3 car garage and a gameroom would have sold for $350,000 two years ago now will only sell for $339,500.
Your loss on the home your selling is $5,400 while your gain on the new home is $10,500.
Your net gain on your home and investment is $5,100.
Also something important to analyze and realize when purchasing a home in a softened market is the PITI (principal, interest, taxes and insurance) of today compared to the PITI of homeowners two years ago. I will use the move up example above.
You decide to purchase the 3,500 sq. ft. home with 4 bedrooms, 3/1 baths and 3 car garage and a gameroom for $339,500.
Two years ago the PITI at the $350,000 would be based on the following information.
Years: 30
Interest Rate: 6.5%
Loan Amount (20% Down): $280,000
Annual Taxes: $10,500 (Based on a tax rate of 3.0% - excluding home exemption.)
Annual Insurance: $2,000
PITI = $2,811 a Month
Now looking at PITI with today’s interest rates (Today’s interest rates may vary depending on credit scores, risks, etc. Talk with a lender to get loan qualification.)
Today the PITI at the $339,500 would be based on the following information.
Years: 30
Interest Rate: 4.25
Loan Amount (20% Down): $271,600
Annual Taxes: $10,185 (Based on a tax rate of 3.0% - excluding home exemption.)
Annual Insurance: $2,000
PITI = $2351 a Month
So in summary in this example you would net $5,100 on your investment by moving forward with the purchase of the larger home, and you would pay $460 less a month than the previous owner. If you are running out of space in your current home, and looking to purchase a larger home, there is no better time than now to act. Don’t sit on the fence with this decision because the market is cyclical. Gambling with whether or not your particular market has reached it’s bottom will more than likely result in you missing the opportunity as the market begins to improve.
Contact Jeremy Williams of Keller Williams Realty NE for a free consultation on your home buying and selling needs, 281-387-7689.
Jeremy specializes in residential real estate in the northeast Houston, Texas area including Atascocita TX, Humble TX, Kingwood TX, Summerwood, Eagle Springs, Lakeshore and Fall Creek. For more information about the real estate services Jeremy offers his clients, visit www.williams4yourhome.com.
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