I like it! this does well for me so I'm happy, time to start looking again.
also, rates are always more important than price of house imo...
on a 400K house @ 6% for 30 years, total interest $463,352.76
same deal with a 5.5% rate and total interest paid goes down to $417,616.16
difference of $45,736.6
these days with all the BS incentives that they throw at you, there's virtually no way you can talk them down $45k....now if you can then more power to you...or is it?
400k - 45736.6 = 354263.4 @ 6% 30yr and you're still looking at $410,372.31 total interest and that's only 7K less. But like I said, you would have to be a magician in order to talk them down that much...
you're more likely to talk them down at a max of 20K so that would be more like 380K @ 6% 30yr and what you're really looking at is $440,185.12 total interest. So after all that "dealing" you really still end up paying 23K more in the long run. on top of that, the 20K that you saved will most like go towards furniture that that's automatically gone. You could argue that putting the 20K in a 30yr cd @ 5% apr and make about 66K in interest back, but how many people will do that instead of using it to furnish the house?
also, typically, in order to get a 30yr fixed rate, they won't let you do it unless you put up 25% up front to show them that you can handle it. So with that, all the numbers change
your 400K @ 6% 30yr becomes 300K @ 6% 30yr and now the total interest is $347,514.57
your 400K @ 5.5% 30yr becomes 300K @ 5.5% 30yr and the total interest is $313,212.12
your 380K @ 6% 30yr becomes 280K @ 6% 30yr and the total interest is $324,346.93
the question then becomes do you put down the 100K or show them all your finances and prove to them that you can swing it with 0 down. If you can do that, then invest the 100K in a simple 30yr cd @ 5% apr and you're looking at getting $332,194.24 in interests back and that should be enough to cover over 3/4 of your mortgage interestes.
this is just fixed rates, don't even get me started on flex. market rates..I don't even know why people would ever consider such a loan....
with all that said, the real question then becomes should you buy that 400K house or is it more realistic to step down to a 300K home? that's why there are so many forclosed homes because people think they can afford that mansion when in reality, they really should've went for the more modest home. Even if you have the money, long term wise, it's better to invest that money than to put it down for a house. What really bothers me is that people who are in trouble with their house note will still pay off the CC's first becore they pay the house. Yes, CC interest rates are higher, but last I checked...CC's don't put a roof over you and your family's heads and stop the rain from coming in. Stop spending so much and stop using that CC!