Why it isn’t a bad time to buy a home?

If you are thinking about buying a home but may be a little scared about the market because of the news headlines, this video is for you.

I just want to put the market in perspective. 

Let’s assume for these scenarios, that you have a 5 year mortgage with 25 year amortization.

If you bought a home 2 years ago and paid $800,000, put $100,000 down, your interest rate would have been 3.9% and your monthly payment would be $3,600. 

$3600 a month in the first year x 12 months  = $44,000 in mortgage payments in the first year.

Out of those mortgage payments, $17,000 would have gone towards the principal  or 40% of your monthly payment.

Over 5 years you would have paid $92,000 towards your principal.

If you bought a home today for $800,000 (well really that same home would cost about $950,000 today so let’s use that number.

Purchase price $950K, we will use the Same downpayment of $100,000

So now your mortgage is $850,000 but your interest rate is now only 1.6% making your payment $3,400.

In your first year you would make $40,800 in mortgage payments.

The difference is that $28,000 of that would go towards the Principal in first year  which is 70% of your monthly payment (the lower the interest rate, the more money goes towards principal)

So over 5 years, you would have paid down $140,000 towards your principal.

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