September 30, 2008
To test Nancy Pelosiâ€™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 â€œbudget surpluses,â€ I went to Lending Tree to see what kind of mortgage terms I could get to buy my first home today. . . .
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, thatâ€™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 â€œgreatâ€ 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 isnâ€™t currently on the market, another home with the same floorplan and in the same division 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 monthâ€“about a dollar less than what I was paying for the same home in 1996.
Yeah, but try getting a 120% no-doc interest-only loan now!
UPDATE: Reader Todd McLaren writes: “I’m not all that surprised that this guy could get a good mortgage at a great rate and payments… but I was SHOCKED that he could buy a house for 139,000.” Todd was emailing from California. Houses are a lot cheaper elsewhere.