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“Home is where one starts from.” — T.S. Eliot
Thinking of buying a house or condo? Here’s an important fact: the mortgage rate you get has a big effect on how much the home actually costs you.
When shopping, buyers often focus only on the listing price — for example, a range of $200,000 to $225,000 (outside pricey markets like NYC or LA). But unless you pay cash, your financing changes the monthly and total cost. That means mortgage interest matters as much as the sticker price.
The media reminds us that future home prices are uncertain. After the recent rapid rise and correction, prices have settled to more sustainable levels, but only time will tell if they’ve truly bottomed out.
To simplify: home prices are only part of the equation. With a mortgage, interest rates can dramatically change your payment. A monthly payment that looks affordable now can become much higher if rates move up. Interest rates are at historically low levels today; in the 1980s they topped 10%. If rates rise to, say, 7.5% in a few years, your monthly mortgage could jump by a few hundred dollars — a realistic and important possibility, especially as economic growth and inflation increase.
Use this perspective when planning. Don’t assume current conditions will last forever; consider both past patterns and present data when making financial choices.
Practical tip: keep a dedicated personal finance notebook by your computer to record goals, plans, and calculations so you can track decisions and revisit them as conditions change.
