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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Timothy Liu who wrote (30846)	10/20/1999 8:45:00 PM
From: Benkea	Read Replies (2) \| Respond to of 99985

Timothy: "Still better to be less in debt than paying higher interest. You can always refinance in the future if the interest lowers. But there is nothing you can do if the house lose value." My point was that since 1 to 1.5X what MOST people pay for their homes (should they keep them for 30 years) is interest, paying a little less for the 1X home price can be offset if you have to pay more for the rate that determines the 1X to 1.5X part (interest). IE: Say you buy a house for $200k with a 30 year loan. If you had bought last year, you would have a $160K (80/20) 7% - 30 year loan (not even considering the 4.8% rise in homes since then) with a P&I payment of $1064.48 for a total 30 year payout of $383212.80 + your original $40k down payment for a total of $423212.80 for a $200000 house. Those who waited until this year are looking at more like an 8% loan on the $200000k purchase (excluding the $9600 in appreciation over the last twelve months). This person will be paying $1174.02 X 30 years + $40k down payment of $462647 for the same house the other guy paid $423212.80 last year (again excluding the $9600 appreciation). Now if only the guy can get the house to drop 4.8% (the annual appreciation) + another 20% (the $39500k difference over 30 years), he was very wise. If he can't get the house 25% cheaper (highly doubtful), he wasn't so wise. I bought a rental that closed on 7/31/98 for $200k and put 20% down. Although I paid 3 3/4 pts to buy the loan down to 6 1/4, I could have gotten 7% w/ no points. That same rental is worth almost $240k MIN this year and the loan would run around 8% with no points. I am glad I didn't wait! Anyway, I am done with this topic and apologize starting this. It was probably stupid of me to think the original poster hadn't already thought about this anyway.