Home Buying Power In Today's Market | Fairfield Real Estate Group

If you are going to look at home buying power now, the disparities with that two years ago are in some way quite astounding. For those that can qualify for mortgage loans, buying real estate has never been this affordable because of the declining home prices and lower interest rates.

While the market really started slipping in the summer of 2007, home prices in Utah didn?t really start declining until 2008.

If you wereshopping for Salt Lake City Real Estate in July of 2008, the median list price of those homes was $309,000. At that time a common rate for 30 year fixed mortgages of primary residences was around 6.65%. For a home buyer buying the median home with a $44,000 down payment, this would leave them with a principal and interest payment of $1,701. And that was a good time to buy

Compare that with market conditions now:

The present-day median list price of Homes for Sale in Salt Lake City is $214,000. And, mortgage interest rates can be obtained at 4. If a buyer placed the same $44,000 down payment on the median house, at the going interest rate under these conditions, their payment would be just $836 a month.

That?s less than half as much as the monthly payment under the 2008 scenario.

In the first scenario, if the home buyer would have paid their mortgage off at terms over 30 years, they would have paid a total of $347,434. They would have paid just $131,067.21 in the second scenario. And that means savings of more than $216,000 in interest over the life of the loan.

Because interest rates are so low now, and because home prices are lower, the buyer might basically want to look at a 15 year fixed mortgage. With a 15 year fixed mortgage at the current median price, and the same $44,000 down payment, the buyer would have a monthly payment of$1,215.30. Yet more low priced compared to the 30 year fixed payment of 2008, but paid off twice as fast. A home buyer would have saved as much as $300,000 in interest compared with a 15 year fixed mortgage today with if they would have bought in 2008.

Now this scenario has flaws, and people rarely actually bought homes priced at the median price, but compared with two years ago, Homes for Sale in Salt Lake are very cost-effective.

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Source: http://www.fairfieldrealestategroup.com/112/home-buying-power-in-todays-market/

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