MOBILE:   FAX:
 Welcome to the RealEstateofColorado.com Blog

2012-01-18 21:37:24
One Size Doesn't Fit All

Rarely, does one size fit everyone and the same goes for advice. The following suggestion is not right for everyone. However, for people with job security and who don't own a home; for people with good credit and enough savings for a down payment, there may never be a better time to buy a home.

Homes have had a significant price correction but in many markest, they have started to rise again. The lower prices combined with historically low interest rates make this an opportune time to buy a home if you can afford it.

One of the reasons homes are an attractive investment is that fact that you can use a small down payment and finance the balance for 30 years. The principle, called leverage, allows you to earn a return on the value of the home rather than the actual cash investment. Small appreciation can create a large rate of return on the initial investment of the down payment and closing costs.

The following example is a projection at the end of five years for a $175,000 home with 3% closing costs and a 5% interest rate for a 30 year term. The rate you see in each column is an annual rate of return based on the equity of the home at the end of the five year period due to both appreciation and amortization of the loan.

The nature of positive leverage will cause the returns to be higher with a smaller down payment. As you see in the table, the return is higher on the 3.5% down payment than with the 10% or 20% down payment.

If you're curious to see if this advice might fit your situation, you really need to sit down with a knowledgeable real estate professional who can help you assess your position. It's worth the time because there may never be a better opportunity than now.

 
Blog Archive
2014-02-03 08:51:39
Find a Better Return

2014-02-01 09:26:32
Why Borrowers Pay Different Rates

2014-02-01 09:23:51
Refinance to Remove a Person

2014-02-01 09:18:46
What Kind Of Showing Was It?

2014-02-01 09:17:26
What Can You Expect?

2014-02-01 09:15:56
Interviewing a Mover

2014-02-01 09:13:54
Personal Finance Review

2013-11-16 14:02:34
'Please Take Our Offer'

2013-11-16 13:51:09
Retirement Without a Mortgage

2013-11-16 13:49:42
If I'd Known

2013-11-16 13:37:54
Who's Paying Your Mortgage

2013-11-04 12:30:25
Breathe Easy

2013-11-04 12:27:14
Will the 'Good Life' Be Ready When You Are?

2013-11-04 12:24:31
What's It Worth?

2013-11-04 12:19:54
Renters Want to Buy

2013-11-04 12:18:44
Low Inventory = Multiple Offers

2013-11-04 12:15:17
Debt Relief = Income

2013-11-04 11:52:44
FHA & VA Assumption

2013-11-04 11:42:03
When Rates Go Up

2013-11-04 11:21:49
It Can't Hurt to Wait, Can It?

2013-11-04 11:19:00
Where Is It Invested?

2013-11-04 10:48:02
Real Estate 411

2013-11-04 10:46:22
All Dollars Not Equal

2013-10-21 13:47:26
Get Regular Check-ups

2013-10-21 13:43:53
A Home Is More Than an Address

Click here to see ALL articles.


Comment on this Article

Your Name:
Your Email:
Comments:
Verify:  Please enter the numbers shown to help eliminate spam.