Easy Old Math

I was holding a really nice home open last Sunday. Into the open house walks a young couple, they were soooooo excited to be home shopping for the first time. I love that enthusiasm. They asked me if I could “hold the home” for them! They were not quite ready to write an offer, but that’s ok. I told them not to worry, that I’d ‘have more!’.

We spoke about the monthly home loan payment and what their budget might be for that payment.

It dawned on me that a lot of home buyers who are just starting out, may not know how to quickly figure out the monthly home payment. It’s old math. When the interest rates were up in the 6 and 7% range, one could use a 1% of purchase price guideline–$300,000 purchase=$3000 per month payment. Now, with rates hovering around 4-4.5%, a Sacramento home buyer can figure a “little below 1%”. Sorry, not very scientific, but the simple math is easier than figuring .762% of purchase price (Or whatever the fractionalized number is!).

For instance: My buyer who closed the first of April purchased for $180,000. Her PITI loan payment is $1296 a month. That’s a three bedroom, two bath home , attached two car garage and a yard for a $100 more per month than a two bedroom apartment and a covered parking space !!!

A good loan officer can give you a very accurate quote on monthly loan payments, but if you’re out there swimming alone, “A little less than one full percent” (of purchase price) can be a good working equation. At least for now, as long as rates stay low.

It’s a great time to buy! Questions always welcome from buyers and sellers, don’t be shy!

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