You need to know this....
Real Estate: You’ll regret not knowing this... Why you should listen. I jumped into the industry back in 2004. As a licensed loan professional and licensed Realtor I have seen a lot. Most of what people see and hear in the industry is marketing. Most of the homes that are staged are staged to make individuals emotional. Think about it. Real-Estate is the biggest purchase most people will make. So it is safe to assume there has been a lot of research into what make people buy the biggest investment of their lives. With the induction of technology that research has only become better. The biggest marketing ploy in my opinion is the difference between a Seller’s market and a Buyer’s market. When the interest rates increase typically the prices decrease. When the interest rates decrease the prices increase, generally. Think about that for a second. Rates decrease = Prices of homes rise Rates increase = Prices of homes decline So who is making the best choice? Or, is it really a level playing field the whole time and people are just emotion to either lower rates or lower prices. Are you more interested in the overall payment or the monthly payment. Why is it that the price of the home over 30 years is not displayed upfront? There are quite a few homes in Sacramento, California that in 2016 that were valued at and being sold for $350,000.00 - $380,000.00. Those same homes in 2021 were being sold for $465,000.00 - $510,000.00. Now surely no person would argue that inflation went up to substantiate the home increase. So what is the 30 year payment difference of a $360,000.00 home at 6.5% vs $480,000.00 at 2.875% **Both calculated with 5% down** | $360,000.00 home at 5.5% | $480,000.00 at 2.875% | Principal & Interest = $699,062.00 | Principal & Interest = $681,087.00 Down Payment | $18,000.00 | $24,000.00 Monthly P&I Payments (Principle and Interest) | $1,942.00 | $1,892.00 Surely both individuals believe they did the right thing in buying the home. Both generally had different buying triggers. Both may look at the other and believe that the other individual received a bad deal. Both mat have had professionals tell them that they did the right thing. So when someone asks me how the market is and if it is a good time to buy or sell I understand that they are letting me know they know very little about Real-Estate in my opinion. There is nothing wrong with this. We only know what we know. Here is the truth every person should know. What you do not know > What you know What you don’t know is greater than what you know. Be honest with yourself for a second. I early on in my career believed some of the remarkable marketing ploys in the industry as well. What would trigger you more. The interest rates or the lower costs? Where you shocked to see that the difference in payment over 30 years is less than $1.70 a day? Well if you thought that was shocking… Buckle up buttercup because we are about to go down the rabbit whole. Lower interest rates!!! Refinance now it is a wonderful time! Lower your payment! Sound familiar. We should look at the individual who purchased their home in 2016 for $360,000.00. Their initial P&I (Principle and Interest) payment was $1,942.00 a month. If they were to refinance 5 years later for the lower interest rate of 2.875% the payment would drop down to $1,419.00. No remember this is simply the P&I payment. They may also have mortgage insurance, taxes, insurance, and other payments included in the monthly mortgage.
