One Halloween, believe it or not, a thought emerged. “What?” I wondered for the first time ever, “is the mortgage payment on that house?” We smiled, my son said “Trick or treat” and they gave him a treat.
This was symptomatic of an obvious developmental change. Some buyers bloom early, whereas others only develop an interest in home ownership later. It is a bit like the transition between crawling and walking….renting to owning.
The mortgage payment depends on more than one factor. One, is price of the house. Another, is how much of a deposit was made on the property. There is also, the length of the mortgage loan- long term commitment is what its all about…or at least, it appears that way…and then there is the rate of interest on the loan.
Here are some figures just to give you the idea of the kind of relationship these factors have to one another. A rather fancy Million dollar home can have a monthly mortgage payment of over $10,000 based on a 10 year loan, with $50,000 having been paid ‘put down’ on the home at the beginning. This very same home can have a monthly payment of about half that because of taking out a 30 year loan, instead of the 10 year one. You can drop your monthly payments by thousands if you could, for example, put $200,000 down on that Million dollar home.
If price tags get your attention early on: here’s another view. Let’s say, you noticed an attractive $189,000 house in the neighborhood. You have your feet under your rump, but how do you stand up without holding onto the livingroom table? Grab the table: here are some different possible payments based on one price and a 30 year mortgage. If you were able to put $50,000 down on this house, you could get sensible payments of $833/month. The exact same place with only $10,000 down and the same rate of interest on the loan would require $1073/month. Finally, let’s say you were to manage to make a “No money down!” deal on this residence. Then you would need to be prepared to put one foot in front of the other one at $1133 every month.
Maybe the baby makes one step and falls down. Yes, every month, for thirty years in a row. The baby can do it, but not all at once, not all today. Today, that may be daunting to you, but you can do it. Eventually, just like the baby, putting one foot in front of the other for thirty years in a row of mortgage payments will be perfectly normal and easy to take in your daily stride.
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