Category Archives: Mortgage

Money Monday: Homeownership rates affected by student debts

Student debts have seemed to affect homeownership rates, according to the Federal Reserve Bank of New York.

student loan debt

About 32% of those in their 20s owned a home in 2007, but that’s fallen drastically to 21% in 2016.

While the poor labor market and memories of the housing bubble certainly played a role, student debt can explain up to 35% of the decline, according to a report from the Federal Reserve Bank of New York released Thursday.

The results suggest that the rise in college costs will result in “weaker spending and wealth accumulation among young consumers in the years to come.”

It’s consistent with surveys that have asked those with student debt if it affected their decision to buy a home. Half of those under the age of 35 surveyed by the National Association of Realtors in 2016 said it had delayed their purchase. And 25% told Pew Research Center that student loans had made it harder to buy a home in 2011.

Read more of CNN’s article here: “Yes, student debt is delaying homeownership.”

Home Equity

Homeowners are tapping into equity

Because of the rising home prices, homeowners are cashing into their home equity.

This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS.

Money Monday: Don’t make these homebuying mistakes

When venturing into shopping and buying a home, avoid some common mistakes:

home buyer regrets

  1. Interviewing only one lender
  2. Not getting pre-approved right away
  3. Maxing out your mortgage limit
  4. Letting your dreams and emotions dictate which house you purchase
  5. Waiving contingencies without understanding just what that means

More tips for homebuyers are available in CNN’s article here: “7 first-time homebuyer mistakes to avoid”.

Money Monday: Americans are paying more than they can afford for housing

Rising housing costs are putting a major squeeze on Americans.

“Nearly 39 million households can’t afford their housing, according to the annual State of the Nation’s Housing Report from Harvard’s Joint Center for Housing Studies.

“Experts generally advise budgeting about 30% of monthly income for rent or mortgage costs.

“But millions of Americans are far exceeding that guideline.

“One-third of households in 2015 were “cost burdened,” meaning they spend 30% or more of their incomes to cover housing costs.”

Read more of Money.CNN.com’s article here: “39 million households are paying more for housing than they can afford.”

 

Money Monday: Increase your credit score

Quick ways to up your credit score.

“Most people don’t put much thought into their credit scores until the time comes to apply for a loan. If you expect to need financing in the next few months and aren’t convinced your credit score is high enough to get you approved, you’ll need to act quickly to improve your chances. Thankfully, there are several things you can do to boost your credit score in record time.” (“4 tips to increase your credit score fast.” Maurie Backman. 8 May 2017. http://money.cnn.com/2017/05/08/pf/credit-score-tips/index.html?iid=Lead)

One way to increase your credit score? Ask for an increase in your credit limit. But read CNN’s article for more tips! 

Read all of CNN’s article on increasing your credit score here: “4 tips to increase your credit score fast.”

Money Monday: Reasons Not to Purchase a Home with All-Cash

Even if you have the financial means to put in an all-cash offer, you may not want to do so.

All-cash offers can be more appealing to home-sellers, but you also need to take into consideration the other aspects of paying so much cash upfront.

All-cash offers in today's real estate market

  1. Will you have enough liquidity left? At least a few thousand dollars left in your pocket is ideal. You may have repairs, upgrades you desire to make, and increased utility and maintenance costs for your new house — not to mention your typical costs and unexpected financial needs (such as medical bills or suddenly losing employment).
  2. What if you easily qualify for a mortgage? Interest rates are still on the low-side, and by obtaining a mortgage to purchase a house, you would be able to keep a large chunk of your finances.
  3. Paying all-cash means you miss out on a tax break. When you have a mortgage, you are able to receive a tax break on the interest paid to the mortgage lender.
  4. & 5. reasons are available to read at Finance.Yahoo.com: “5 Reasons Not to Purchase Your Home With Cash.”

Money Monday: Preparing to Buy a Home

Buying a home — it’s a big decision; one that you should prepare for in advance.

buyers and sellers real estate disclosures“One of the most important things a first-time homebuyer can do is prepare their budget for this big financial event.” (“How to Prepare Your Budget for Buying Your First Home”. http://finance.yahoo.com/news/prepare-budget-buying-first-home-123000854.html)

And there’s a few key ways that you can get your budget in order:

  1. Work on getting your credit score up
  2. Save for a down payment on a house
  3. Prepare for extra costs when buying

Read more on Yahoo’s financial advice on prepping your budget before buying here: “How to Prepare Your Budget for Buying Your First Home”.

Money Monday: California Housing Affordability

Higher wages and seasonal price declines affect California housing affordability.

housing market forecast

• “Thirty-one percent of California households could afford to purchase the $511,360 median-priced home in the fourth quarter, unchanged from third-quarter 2016 and up from 30 percent in fourth-quarter 2015.” (“4th Qtr 2016 Housing Affordability”. CAR.org. 9 Feb 2017)

• “A minimum annual income of $100,800 was needed to make monthly payments of $2,520, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.91 percent interest rate.”

Read all about 2016’s housing marketing in the fourth quarter, in the CALIFORNIA ASSOCIATION OF REALTORS’ article here: “4th Qtr 2016 Housing Affordability“.