Tuesday, November 20, 2012

Cost vs. Price Explained












We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home. Let us explain.

Yesterday, we reported that the Mortgage Bankers Association (MBA) is projecting that mortgage interest rates will inch up over the next twelve months. On Monday, we explained that many experts are calling for home prices to also increase over the next year.

What Does This Mean to a Buyer?


Here is a simple demonstration of what impact certain changes would have on the mortgage payment of a home selling for approximately $200,000 today:


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