A Common Mortgage Misconception

Mortgage Misconception

The availability of mortgage credit is not at the same level that it was during the boom in housing (2005), and that’s good news. However, the constant headlines which talk about “tight credit” are causing some potential home buyers to doubt their ability to purchase. We want to rectify the misconception of what is required for a down payment in order to purchase a home in today’s market.

Freddie Mac recently discussed the confusion many first-time homebuyers have about the down payment they need in order to buy:

“Did you know that the average down payment among first–time homebuyers is 6% and it's 13–14% for repeat buyers…It's possible to put down even less.

Many potential homebuyers think that only the FHA helps make mortgage loans with low down payments. Not true.

Freddie Mac's Home Possible mortgage products let qualified homebuyers put down as little as 3%.”

New Home Sales up 12%!

New Home Sales up 12%!

• Nationally, both New Home Sales and Existing Home Sales are up month-over-month and year-over-year.
• Inventory remains low which continues to drive home prices up as demand continues to exceed 4.7-month inventory.
• The median price of new homes is up 12 percent from March 2016, while the median price of existing home is up 6.2 percent this April 2015.

Rents Skyrocket to Highest Rate in Decade!

Rents Skyrocket to Highest Rate in Decade An analysis by Market Watch revealed the cost of rent was 3.8% higher than a year ago for the second straight month in June.That's the strongest yearly price gain since 2007.  Source: Keeping Current Matters  Look For Shift Back to Homeownership, notes Tom Skahen, New Homes CEO of Streamline Communities. As rental rates continue to push up in the Northeast and mortgage rates trend down, start looking for the shift from rental to homeownership. Since the great recession of 2007, homeownership rates have dropped nearly 10 percent in the United States. CNN Money reports that 110 million people in the U. S. now rent and 21 percent are paying more than 30 percent of their total wages on rent, while homeowners percentage of housing expenditure continues to trend down. This is not sustainable, and we've hit a crossroads. There is going to be a shift back to homeownership and that includes the somewhat non-existent Millennial buyer. So builders, get ready for this demographic that's about to enter your market.

New Home Sales

New-Home Sales Are on Track for a 7 year High - But it's Still Not Enough to Meet Demand Source: Realtor.com Sales of new single-family houses rose last month to an annualized rate of 546,000, the Census Bureau(https://www.census.gov/construction/nrs/pdf/newresales.pdf) and the Department of Housing and Urban Development reported on Tuesday, an increase of 2% over April and the highest rate since February 2008. Despite the fast pace of sales, the press release reported only 206,000 new houses for sale (seasonally adjusted) at the end of May - a supply of just 4.5 months.  Six months is considered a healthy supply.  Meanwhile, the median sale price of new houses was $282,800 in May, and the average sale price was $337,000.  Those numbers were $285,60 and $323,500 respectively last May.  Back then, there was a 5.1-month supply. That's pretty good news for buyers.  "New home prices are influenced heavily by what builders build and offer," says Realtor.com chief economist, Jonathan Smoke.  "The lower price is evidence that they are starting to build more affordable homes in their mix."

Cost of Waiting - The Time to Buy is Now!

Why should you buy a home now?  It may cost you more if you wait.  Below shows the projected monthly increase in a mortgage payment today versus 2017.