You Can Afford More House Than You Think in Colorado Springs
I showed a house in Colorado Springs to some clients yesterday that was priced at the same level it was sold for, brand new, in 2002. Coupled with interest rates quotes that started at 3% for a 5 year conventional ARM, it struck me how much of a bargain homes are right now. In 2002, a $300,000 mortgage at 6% would have been a bargain (the average was 6.5%), with a PI payment of $1,798.65. With 8 years of landscaping, decorating (and yes, some wear and tear), the 3% rate would be only $1264.81. The same house!
In 2005 we bought a rental property with a 5 year ARM at 5.875%. If someone qualified for a $500,000 property with a $400,000 loan in 2005, their payment would have been $2366.15. In todays market, the same mortgage would be 3% or $1686.42. Or, keeping the payment about the same, they could buy a house for $650,000. Which in 2005 might have been closer to $800,000 or a $1 million!
While not every price range has been affected the same way with price drops, the drop in interest rates makes every house a bargain right now. Now if we could just come up with some more jobs for people so they can qualify 🙂