Owning a home may be cheaper than you thought

Dated: June 21 2018

Views: 150

Let’s discuss an economic measure called the affordability factor.

The affordability factor is the calculation of how much home you can afford taking in to consideration current interest rates, your loan qualification and the current market.  Affordability in the US and in Austin, TX is historically low.  Here is an easy example: 

 

1992

2016

Interest rate

8.5%

3.75%

Loan amount

$150,000

$250,000

PI payment

$1,153

$1,157

So your payment on a $250k house today would be the same as your payment on a $150k house in 1992. 

Another way to look at affordability is the impact of increasing interest rates.  I think we all can agree that interest rates will go up (hint:  they have never been lower).  For every 1% increase in interest rate, you lose 10% of your buying power.  Here is an easy example:

Interest rate

4%

5%

Loan qualification

$400,000

$360,000

PI payment

$1,909

$1,932

And then the next angle is to look at it from a % of income … mortgage payment as a % of income.  It is historically low.

 

This information is provided as a guide. It is strongly recommend that you contact your mortgage specialist for a thorough personalized mortgage assessment. We can help you make that contact.

 

 

© Julie Nelson and The Nelson Project at eXp Realty,2018. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at eXp Realty with appropriate and specific direction to the original content.  Julie Nelson is a licensed Realtor with Keller Williams Realty in Austin, TX.  This article and other blog postings should not be construed as legal or professional advice.  Contact your favorite Austin real estate professionals in person for actual advice. Search for Austin homes or connect with Julie at www.thenelsonproject.com.  

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Julie Nelson

Licensed since 1999, Julie is a real estate veteran in Austin, TX, brokered by eXp Realty. Realtor, trainer, coach, industry author, career strategist, Julie serves buyers and sellers throughout the ....

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