A sound financial move

A sound financial move
By Melinda Fulmer, MSN Real Estate

Often, analysts say, people get so fixated on getting the lowest possible price that they forget just how little difference an extra $10,000 in the home price can mean to their monthly mortgage payment.
Assuming a buyer pays $300,000 rather than $310,000 on a 5.7%, 30-year loan with $30,000 down, he’d be paying $1,575 a month rather than $1,634.
Of course, the costs of the initial $10,000 add up the longer you own the home without paying off the mortgage. But, that additional $10,000 in value might be just the psychological boost some sellers need to part with their homes.
And for first-time home buyers in markets such as Los Angeles, there's extra incentive in the form of rapidly rising rents. Los Angeles rents have climbed 25% since 2003, to an average $1,617, according to data firm RealFacts.
In areas such as Los Angeles and Philadelphia, rents are getting close to or surpassing a mortgage payment. And the mortgage-interest deduction on your taxes is a huge help for those who need a write-off, Conway says.
Moreover, if you've lived in your house for many years and built up some equity, you can weather selling in this kind of market and finding another home. That's especially true if you are moving from a boom market, such as Los Angeles, that is only now beginning to bust, to another area where prices are lower.