Various factors affect cost of a mortgage loan

09.26.09
By Steve Monfort

People who are looking to save money when they take out a mortgage loan can gain some perspective from recent media reports about factors that can substantially decrease the perceived value of a property.

A recent ABC News article focused on so-called "stigmatized properties," which can often be extremely difficult to sell because of some notorious incident that took place there. The news network points out that the mansion formerly owned by convicted swindler Bernard Madoff even falls into this category.

Other things that make a property "stigmatized" include tabloid-style incidents or even notorious crimes. The news network cites real estate professionals who say that a murder is the most difficult incident to deal with from a sales perspective, followed by suicides and perceived haunting, and even sex and celebrity scandals.

Another factor that contributes heavily to the cost of a property investment is the number of homes currently on the market, and the number of foreclosures available since this also depresses overall costs.

A U.S. News and World Report article cites government figures which found that the nationwide backlog of unsold homes is now at 7.3 months. This is an improvement from the 10.9 month backlog that was in place last year when the housing meltdown was still in full swing.

Mortgage rates are also a significant factor in setting the overall cost of a housing purchase. The rate for a 30-year loan currently stands at 5.04 percent. An Associated Press report notes that the record low for rates was 4.78 this spring, although rates are still considered attractive to buyers.

Overall, seeking a mortgage loan can be a complex and difficult process for many consumers, but market conditions are at least becoming more and more favorable for them.

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Many factors can affect the cost of a home purchase.