What’s the difference between the price of a house and the cost?

Are you waiting on the sidelines of the Wisconsin real estate market waiting for prices to hit bottom? Do you want to make sure you are getting the best possible price? Are you waiting until home prices start to go up to feel better about buying? Wisconsin has been pretty stable. 2010 prices were down just 1.1%.  And there are those that say you should not worry about home prices – you should worry about the COST.

The price of a house is what you buy it for.  The COST of a house is made up of the price you pay and the interest rate you get. Since few people buy without a mortgage, the long term COST is an important number to look at.  Buying while interest rates are low, even when prices of houses may not be going up, can benefit you, the home buyer, and here’s how:

This chart (courtesy of KCMblog) shows what buying a home priced at $170,000 last November costs versus a home priced at $170,000 would cost if you bought it now. 

Today, even though the price of the home is the same, it would cost $917 a month to own versus costing $828 in November 2010. See the difference the interest rate makes!

During the 90 days a buyer sat on the sidelines, worried about PRICE, the COST went up by $89/month, times 12 months = $1073/year. Over the course of a 30 year loan, the cost of owning went up over $32,000.  And that’s just on a home priced at $170,000. Imagine the difference at a $250,000 priced home and on up.

Even if the price of homes fall another 10%, the COST of the home will rise if interest rates rise more than 1%.  If you’re on the sidelines, go talk to your Realtor and/or mortgage professional now to take advantage of the low costs that low rates provides.

Does that have you pumped up to get looking at homes? If so, we invite you to visit the most comprehensive source for Wisconsin real estate, firstweber.com

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