2001 versus 2006: Tale of two buyers
1536 BOXWOOD CT, SAN MARCOS
This home was first purchased in 2001 for $320K, and is currently listed on the market for $635,000-$665,000. Lets break down the buyer profiles in 2001 and 2006.
2001 Scenario:
Price:$320,000
Down payment (assume 20% to eliminate PMI): $64,000
Interest rate: 6.5%
Mortgage type: 30 year fixed
Monthly mortgage payment: $1620
Total loan payoff over 30 years is $580,000
2006 Scenario:
Price: $650,000
Down payment (assume 20% to eliminate PMI): $130,000
Interest rate: 6.5%
Mortgage type: 30 year fixed
Monthly mortgage payment: $3290
Interest rate: 6.5%
Mortgage type: 30 year fixed
Monthly mortgage payment: $3290
Total loan payoff over 30 years is $1,200,000
So what did we learn? If you financed your loan with a reputable bank they would have made sure your monthly payment did not exceed 35% of your monthly take home pay.
That would mean the 2001 buyer's yearly salary is about $58,000. The 2006 buyer's salary should be about $113,000.
This means your salary would have to double to afford the house in 2006, if you passed on this house in 2001.
Sure there are my exotic loans available today to make your monthly payment appear feasible however, over 30 years you're screwing yourself and your family's future.
4 comments:
rerip,
You haven't seen anything yet, wait till we interest rates reach 8.25-8.5% you will not just see the housing market collaspe but the entire economy will be in a reccession for the next 10 years.
I knew it, you are all renters!
Better to be renter than a F'd borrower (I mean 'proud home owner')..
I've read that only 34% of home owners own their houses outright.
For the rest of them, they either 'rent' the house from the mortgage bank, or the house quite literally owns them..
I guess my next dumb question is,
How many home owners have 1.2 million dollars to throw away over the next 30 years??
Post a Comment