According to the National Association of Realtors’ latest Realtors Confidence Index, 61% of first-time homebuyers purchased their homes with down payments below 6% from October 2016 through November 2017.
Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying. The median down payment for all buyers in 2017 was just 10% and that percentage drops to 6% for first-time buyers.
Zillow Senior Economist Aaron Terrazas’ recent comments shed light on why buyer demand has remained strong,
“Looking into 2018, rent is expected to continue gaining. More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.”
It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.
Bottom Line
If you are one of the many first-time buyers who is not sure if you would qualify for a low-down payment mortgage, contact a Greenway mortgage professional to get started on your path to homeownership!
Greenway's Markets in a Minute | Buyers are taking advantage of low rates
For the Week Ending September 15, 2017 |
Please enjoy this quick update on what happened this week in the housing and financial markets. |
Stocks soared to new record highs this week, in part because estimated financial losses from Hurricane Irma dropped from $200 billion down to $50 billion or less. | |
Higher gas prices and rent increases helped consumer prices jump in August, pointing to firming inflation. The Consumer Price Index rose 0.4% over July. | |
Low inflation, despite a strong labor market, is seen as causing the Fed to delay raising policy rates for a third time this year. It also supports low mortgage rates. |
Mortgage applications jumped this week, as buyers took advantage of low rates. Refinance applications were up 9%, and purchase applications were up 11%. | |
CoreLogic reports that June mortgage delinquencies were the lowest in nearly a decade. Only 4.5% of outstanding mortgages were in some stage of delinquency. | |
Fannie Mae's latest survey shows a record number of consumers who say now is a good time to sell a home. Over 36% agreed, up 8% from July's survey. |
Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time. |
Greenway's Markets in a Minute | New Home Inventory Finally Rises By 1.5 Percent
For the Week Ending August 25, 2017 |
Please enjoy this quick update on what happened this week in the housing and financial markets. |
Central bankers from around the world are meeting this week for the Jackson Hole Symposium. Markets will be looking for signs of imminent policy changes. | |
Very little economic news this week along with low trading volume has left markets quiet. This environment has helped to keep mortgage rates stable. | |
Despite labor market strength, low inflation remains a concern. Speculation is the Fed cannot raise rates again this year unless inflation rises to around 2%. |
New home sales were unexpectedly lower for July, down 9.4% from June. July's sales were a 7-month low and caused some concerns about the housing market. | |
However, before anyone panics, it should be noted that May and June numbers were revised higher. Median new home prices were up 6.3% over last year. | |
Inventory of new homes rose 1.5% last month, the highest level since June 2009. Even still, a shortage of new and existing home inventory remains an issue. |
Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time. |
There’s a lot of conflicting advice about whether it’s smarter to rent or buy. Some say renting is like throwing money down the drain when you could be building equity in your own home. Others argue there are better ways to invest your cash, and you’re giving up valuable flexibility.
“We typically make big decisions like whether to rent or buy with emotion and defend them with logic, which is why it’s so easy to make a case for either,” explains Dana Bull, a Realtor at Sotheby’s Harborside in Boston.
But there are actually several considerations that can make the decision to rent or buy much easier. Here are five signs you’re ready to be a homeowner.
1. You actually want to own a home.
Enjoy gardening and fixing things up around your place? That’ll make homeownership easier. From coordinating maintenance and repairs to dedicating weekend time to yard work and other projects, owning a home requires a big time investment on top of the financial one. Be sure you’re ready for that responsibility.
“If you’d rather be able to call a landlord to handle issues when they arise, you may be better off renting for now,” says Certified Financial Planner John Piershale of Piershale Financial Group in Crystal Lake, Ill.
2. You’ve saved up for a down payment.
After deciding to take the leap, the next step is to save up a 20-percent down payment. This can help you avoid mortgage insurance – rates vary by product and scenario. “If you can save more than 20 percent, even better,” Piershale says. “Taking out a smaller mortgage means you’ll pay less in interest over time.”
If homeownership is a near-term goal, you can take advantage of your flexibility as a renter by finding a roommate or downsizing to a cheaper place to accelerate your savings.
3. Your budget can handle all the extras.
A mortgage is just one home cost to budget for—there’s also taxes, insurance, maintenance and homeowners association fees if you own a condo or townhome. Generally, mortgage lenders want to see all these costs add up to no more than 28 percent of your income, Piershale says. (You can get estimates on sites like realestate.com.) It shows you can comfortably afford home costs and other living expenses, as well as repairs that may come up.
Don’t have that much wiggle room? Consider looking at homes with lower price tags or work on upping your income and savings while you’re still renting.
4. You’ve found a neighborhood you’d like to live in for years.
If you’ll only live in a particular area for a year or two, renting is likely your best bet. “Having the option to get up and leave with minimal strings attached is very appealing,” Bull says. Renting can also be a smart way to test the waters, learning what you like and dislike about different neighborhoods.
When you’re ready to put down roots and plan to stay for at least five years, buying’s back on the table. Just make sure you thoroughly research the area first: If you have kids, are you happy with the school district? Is the neighborhood safe? Are the home prices increasing generally? You can find detailed information on crime rates and school rating on sites like City-Data.
5. You can’t rent a similar place for significantly less.
If you can rent in your desired area for much cheaper than a mortgage and other housing costs would set you back, you may benefit from renting a while longer and saving or investing the difference in monthly expenses. Not only can this build your net worth in the meantime, but it allows you to test-run your budget. When you do buy one day, you’ll already know you can comfortably handle the uptick in expenses.
Greenway's Markets in a Minute | No New Policy Rate Increases
For the Week Ending February 3, 2017 |
Please enjoy this quick update on what happened this week in the housing and financial markets. |
The Fed concluded the most recent FOMC meeting and announced there would be no policy rate increases. The next FOMC meeting is scheduled for March 14/15. | |
Economic activity in manufacturing expanded in January, surpassing economists' expectations. Manufacturers grew at the fastest pace in more than 2 years. | |
The Consumer Confidence Index dropped in January after reaching a 15-year high in December. Despite the slight drop, consumers remain confident overall. |
Construction spending was down slightly overall in December. However, spending on residential structures was up 0.5%. | |
Despite an increase in mortgage rates, pending home sales rose 1.6% in December compared to November. Sales were up 0.3% year-over-year. | |
Home prices continue to rise, up 5.6% in November according to Case-Shiller. Increases are supported by rising personal income & decreasing unemployment. |
Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time. |