Do you remember when you purchased your first home? If you’re old enough, you remember when interest rates were as high as 12 3/4%, as a client friend reminded me yesterday. “I didn’t worry too much about the interest rate because, in relative terms, it was reflected in the price.” The price was always the main driver of value. Still is.
What’s always worth remembering, he reminded me, is you can negotiate the terms. But you can’t revisit the purchase price. And if banks aren’t interested in renegotiating the terms, you can do it yourself through the back door by doubling or tripling your monthly payments.
This is an important reminder for those of you looking to relocate to a red state or purchase a vacation home. You want to do all you can do to get the right purchase price. I like the idea of you living, as a new resident, as a renter.
Action Line: Don’t hesitate to make a move by renting. You’ll get the lay of the land. You’ll see if you actually like living with the deplorables (you will), and you’ll become an expert on prices.
P.S. Negotiating even a small reduction in the price makes a big difference to your bottom line. Here’s what $10,000 you save on a home purchase can turn into in 30 years when compounded at four percent. That’s a return of 224.3% that you can give to your children or use for retirement.
