A Down Market Can Be the Best Move-Up Market
Now that we’re seeing some life in the Frederick Real Estate Market, it’s a good time to discuss ‘moving up’ for Frederick homeowners. A down market can be the best move-up market…as long as you have enought equity in your current home to cover any down-payment and possible closing costs. Let’s crunch some numbers:
Since the Frederick real estate market hit the wall in Winter 2005-06, Frederick home owners have seen a 20% to 25% loss of their equity. Here are two scenarios for a homeowner who desires to move up to a more expensive house:
A 2005 move-up from a $300,000 townhouse to a $450,000 single family home would be an increase of $150,000.
In 2009, after losing 20% of their value*, the townhouse is now worth $240,000, the single-family is now worth $360,000. The cost of the move-up is now $120,000.
With today’s low interest rates of c. 5%, lower than the interest rates were in 2005, your monthly payment will not only be lower because the single-family is $90,000 less than it would have been in 2005, your payment is even lower with a lower interest rate.
The caveat is this: you must have roughly $40,000 to $45,000 in equity to cover the costs associated with selling your home and paying a minimum 3.5% down payment on an FHA loan on the move-up home. (Included in this number is up to 6% for closing cost assistance for the buyer of your townhouse, and we assume a seller contribution from the sellers of the single-family home)
In spite of the doom and gloom from the media, there are benefits to the ups and downs of the real estate market. One of the benefits is Affordability.
*These statistics vary by neighborhood and city.
_____________________________________________________________
The Highland Group
Chris & Karen Highland * 301-831-9947
Turning Point Real Estate – 301-831-8232
email us: isell4u2@msn.com
Text Us: 301-401-5119