Thursday, July 30, 2015

Reality Of Buying A Home May Be Cheaper Than You Think


According to a Federal Reserve study done in the last thirty days, 81% of the renters indicate that they would prefer to own their home if they could do so. More than eight out of ten renters would much rather own than they would rent.

Breaking it down in the report, the non financial and the financial reasons people felt that way.

Non financial reasons... They simply prefer to own, they want to be the king of their own castle. There are fewer rules. There's no landlord telling them what they can do. And 23% say they don't like to move. When you own your home you have stability there. When you're renting, you're not sure at the end of that lease what's going to happen.

Now for the financial reasons... It allows you to build equity. Again, it's cheaper than renting and people begin to realize that more and more now. And 20% even said it provides certainty of monthly payments. They know what their expenses are going to be. And that's important, since they can budget and they can budget savings too.

In the report, it showed that the median home equity of a home in this country is $80,000. That's how much people have in their home equity. But homeowner's, in addition to that, have $7,300 in liquid cash savings. There's a continuity of what their payments are going to be. And they... Once you have a thirty year fixed rate mortgage, for the most part that payment stays the same, unlike rent that keeps on going up. When you compare that to a renter who has, in total, a median cash savings of $800, which might be one month's rent, it's really truly amazing. People understand that owning a home builds wealth. And that comes in home equity.

So most renters realize that jumping into a house is crucially important because it's a forced savings that will give them money later in their life. And money that can be tapped into later, if needed. But although renters know how important it is, 50% say that they can't buy a house because they can't afford a down payment and 41% say they'd love to own a house but they can't qualify for a mortgage. A survey of renters showed that two thirds believe that they need a very good credit score to buy a home with 45% thinking a good credit score is over 780. They also overestimate the down payment funds needed to qualify for a home loan with 36% thinking a 20% down payment is always required. If you are a renter, with this kind of thinking... continue reading for better information.

Let's take a look at the reality of the situation...

People think they need a 20% down payment. According to Realty Direct (this past quarter)... The number of loans being done with less, with only 3% or less down is increasing and is already at 30%. And when we're talking about a 3% or less down loan, 11% of all conventional loans are done with 3% down or less. And 83% of FHA loans are done with 3% or less. Cheaper than you thought?
Let's talk about FICO score...

Many home buyers think they need at least 790, 800. Well, the average FICO score on approved loans that are conventional is 757, much less than the 800 they think they need. And on FHA loans, it's 688, 100 points less than they think they need.

Fanny Mae, Freddy Mac, and the mortgage bank association projections over the next four quarters...

By averaging all four projections together, by this time next year interest rates are going to be about three quarters of a percentage point higher if these projections stay. That will affect mortgage payments.

Except for the last couple of years, there's never been a time cheaper to buy a house than now. Those bars are starting to tick up again. People that are ready, willing, and able to buy right now should know that now is the time. You can save money on a month to month basis and build equity.

Selling your home in Kokomo or Lafayette Areas? Let me help you to make you the most money possible in the shortest amount of time. I offer sellers a professional, written marketing plan, the most progressive marketing strategies in the industry, consulting, and staging.
I am a mobile agent committed to helping you around YOUR schedule. Can't drive to my office? No worries... Let me come to you. I am here to help YOU make this transition and this transaction as convenient and smooth as possible.
Gena can be reached at 765-210-5582 or you can email her at genamartin71@yahoo.com.
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