To test Nancy Pelosi’s hypothesis that after eight years of President Bush the economy is in far worse shape than it was under President Clinton at a time of “budget surpluses,” I went to Lending Tree to see what kind of mortgage terms I could get to buy my first home today.(via Instapundit)
It was the spring of 1996 and I was newly stationed at Fort Hood, Texas along with my very pregnant wife who was one month away from delivering our first child. We found the home we wanted to buy in Harker Heights, just a few miles east of post. The purchase price was $110,000, and because we were only going to be there a few years, a 30-year loan made little sense. So we bought the home on a 15-year fixed-rate VA mortgage of 8.0%, zero points and zero down. If I remember correctly, the monthly payment ended up being $1,211.
So what kind of offer did I get today in the midst of this horrible financial crisis? I got four offers, the lowest of which was a 15-year fixed-rate VA mortgage of 6.0%, zero points and zero down, yielding a monthly payment of $948.20. Yes, that’s right, as bad as everyone says the economy is today, I can get the same mortgage as I had twelve years ago for about $250 a month less than I was paying 12 years ago in the midst of a “great” economy.
But what about the rise in prices of real estate, you might argue? Good question. So I checked Realtor.com to see what my old house might cost today. While that particular home isn’t currently on the market, another home with the same floorplan and in the same subdivision is listed at $139,000. Plugging that amount into the 6.485% effective annual percentage rate of the mortgage I was offered today and I could buy my old home again today for $1,209.69 a month–about a dollar less than what I was paying for the same home in 1996.
Thursday, October 02, 2008