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2013-02-01 19:01:10
Payment Appreciation vs. Home Appreciation

It may be a while until “Home Appreciation” continuously scales up at 4-5% on a consistent basis again.  And hopefully the market won’t drive it to the 20%+ we experienced several years ago.  But what we could see in advance of  home appreciation is: “Payment Appreciation”   Have you heard of “Payment Appreciation”?  It is based on financing rate instead of home value.

Here’s a great example:

Let’s say you purchase a home with a $200,000 mortgage today with a 4% fixed interest rate.  Compare that with the same $200,000 mortgage at 6%- you would save $88,000 over the 30 years just in payments made.   Make the same comparison with an 8% rate, and you would SAVE $185,000 in 30 years by paying the current rates.

Traditionally we look at the investment side of a home in its appreciated value.  Another way to look at it in an investment sense is to hedge against payment inflation.

In a nutshell: homes are cheap, and rates make them even more affordable.   One thing will can count on is: appreciation.  It can happen either through home value, or payment inflation.


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