The Tale of Two Houses
Rick and his wife Jennifer are shopping for a new home. Their realtor showed them a 4 bedroom, 3 bath house with 2450 sq ft. They noticed the bronze Energy Star plague next to the front door but gave it little thought. After all, they thought; “since new homes must comply with the building code all of them must be built with quality.”
Their Realtor then showed them a 2600 sq ft home down the street that was $8,000 cheaper. Because they couldn't SEE the energy efficient features of the more expensive house, and thinking a bigger house for $8,000 less was a smarter purchase, they bought the cheaper house.
Gerald and Mary bought the Energy Star home because they don’t like wasting energy. They also though it might be a healthier home for their daughter, Emily, who has asthma. They paid full price for the home, $8,000 more than Rick and Jennifer.
Who made the smarter purchase?
 
|
|
Rick & Jennifer |
Gerald & Mary |
|
Purchase Price |
$ 274,000 |
$ 282,000 |
|
Down Payment |
30,000 |
30,000 |
|
Amount Financed |
244,000 |
252,000 |
|
|
|
|
|
MONTHLY COST |
|
|
|
Monthly Mortgage* |
1,463.00 |
1,511.00 |
|
Monthly Utilities |
174.00 |
112.00 |
|
REAL COST |
$1637.00 |
$ 1623.00 |
* 30 year fixed @ 6% APR.
The true cost of home ownership.
Just like Rick and Jennifer, most people consider the cost of ownership the price they pay at closing. However, the real cost of home ownership includes the price you pay for the home, plus on-going maintenance and energy costs for as long as you live there. Why? Because houses use energy everyday and energy can be expensive.
Smart shoppers, like Gerald and Mary, evaluated the price tag and the cost to own before they made a purchase. They recognize that sometimes it is smarter to spend a little more up front which can save hundreds of energy dollars in the long-term.
But energy savings weren’t the primary motivator when Gerald and Mary bought their home. Since their home is healthier, Emily hardly uses her inhaler anymore. Plus for the first time since kindergarten, Emily hasn’t missed a single day of school. Mary also thinks their home is more comfortable with less dust. Gerald likes it because it’s quieter.
Rick and Jennifer thought that they were getting a better buy by not paying an extra $8,000 up front. Now they are paying $168.00 per year not to have a healthier and more comfortable home.
So, who made the smarter purchase?
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