$20,000 more home for the same payment??

Anyone who knows me well knows that I'm a big-old nerd.  I love math.  LOVE IT.  Math is so much fun for me that, when I had a free afternoon last month, I spent it creating an Excel spreadsheet to quickly calculate home prices for various loan types given a targeted monthly payment.  Does that sound like FUN?????

What can I say?  It really was a blast.  Even more fun for me was what the spreadsheet showed.  When I got all of the calculates in place, I saw that the swing in home prices for different loan options was bigger than I'd expected. 

Let's say a buyer is comfortable with a monthly mortgage payment of $850.  Given the current interest rates and assuming typical property taxes and home insurance, The home prices for that payment currently range from $109,720 to $128,206. 

Really?  Almost a $20,000 difference in price for the same monthly payment?  Yep!  See my handy-dandy spreadsheet below for the details:

So what does this mean to you as a Realtor?  Well, as you know, the lender approves a buyer based on the monthly payment they can handle, not based on the price of the home.  If the buyer can get more home for the same payment that 1) makes the buyer happier; and 2) makes your job of finding them the right home easier.  Win-Win!

Of course, not all lenders love math like me, so they don't share this kind of options analysis with home buyers.  I do though.  If you want happier buyers and easier house hunting, share my name.  Let's put this awesome spreadsheet to the test :-).