Compare Buying the Same Home in 2005 vs 2012. 

     A great opportunity awaits buyers in 2012!  The perfect combination of lower prices, lower interest rates, & substantial inventory has come together to create values that we may never see again.  Prices are down 25% to 40% from their high in the summer of 2005.  Fixed interest rates have fallen below 4% on conforming-rate loan.  These changes can create a dramatic benefit for a buyer. 

     Let's compare buying the same home in 2005 versus 2012 with a similar loan program.

     Assume the purchase price of a home in 2005 was $800,000, with a 20% down payment.  The interest rate for a 30-year, fixed, jumbo loan would have been 6.5%.  The monthly payment for principal and interest would have been $4,044 per month. 

     The same home today, down 33% in value, would be $536,000.  The interest rate, with a 20% down payment, would be 4.25% for a conforming, 30-year, fixed rate loan.  The monthly principal and interest payment would be $2,110.  The 2012 monthly payment is $1,934 less than the 2005 payment. 

     If you were to stay in the home for 30 years and pay off the loan, you would actually pay $696,240 less in principal and interest, compared to a 2005 purchase.  Oh, by the way, the down payment in 2005 would have been $160,000, while in 2012, it would only be $107,200.....and yes, the property taxes would be less, too.

Although the figures may not be 100% accurate, it illustrates the dramatic differences in interest payment and total savings.