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How can the price of a house go up but actually cost less?

Sounds too good to be true, but take a look at the math. In August 2012, the average Texas home price was $218,900. That number was up $19,200 from August 2008 – four years ago. Not exactly more affordable, however, mortgage rates make a HUGE difference!

For a 30 year fixed rate loan, in August 2008, your rate would be around 6.5%. Right now, that same loan would be around 3.6%.

After figuring payments, the average priced 2008 home would be $1,264 a month while today’s averaged price home payment would be $995. The home that is priced nearly $20,000 higher today than four years ago costs $269 per month less!

If that isn’t compelling enough for you, think of it this way. The lender gives you more loan per dollar. For each dollar that is paid per month on a 3.6% 30-year loan, you get $220 of purchasing power. At 6.5%, it’s only $158 per dollar of loan. So $800 a month buys you almost $50,000 more house, simply because of the difference in interest rates.

Keep in mind that you still have to factor in taxes, insurance and down payment. With our current low interest rates, buying a home just got a LOT better!

Source: Marty Kramer,


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