Should You Pay Off Your Student Loan or Buy a Home?

Group of college students sitting in the library and using wireless technology. Man is using digital tablet while women are using cell phone. The view is through glass.

If you’re still paying off your student loans, does it make sense to buy a house before you’ve paid off your debt?

“Getting into a home can be a good way to build savings and to pay yourself rather than paying someone else for the cost of your housing,” says Matt Ribe, senior director of legislative affairs and corporate secretary for the National Foundation for Credit Counseling. “[But] given the interest rates that are typically associated with student loans, it’s not unreasonable to want to prioritize paying those when you’re just starting out.”

The bottom line? Limit your debt to what you can afford to pay. Here are some questions to ask yourself before making this important decision:

What’s the Interest Rate on Your Student Loans?

“Typically, subsidized government loans are in the 6.5 – 7% range,” says Ribe. “Private loans can be even higher. Even with refinanced loans, you’d be extremely lucky to get less than 5%.” The higher your interest rate, the greater your incentive to pay off your loans before you buy a home.

Are You Making Progress on Paying Down Your Loans?

“It’s possible with some of the income-driven student loan repayment plans to achieve a very low monthly payment,” Ribe says. “But if that payment is not covering the amount of interest that’s accruing every month, then you’re not making progress on repaying your student loan, which means you may have longer-term affordability issues. Don’t conflate your [lower] monthly student loan payment with room in your budget without doing a more thorough analysis.”

What’s Your Debt-to-Income Ratio?

To qualify for a mortgage, your debt-to-income ratio (DTI) should be less than 43%, but many experts recommend it be no higher than 36%. The lower your DTI, the lower the stress of monthly payments.

If your DTI exceeds 43%, focus on paying down your student loans and other debt before pursuing homeownership. “Credit card balances typically have the highest interest rates,” Ribe says, “so we certainly advocate paying those down first.”

Do you have a rainy-day fund?

Experts recommend you have at least three to six months’ worth of expenses put aside in the event of an emergency. As a homeowner, you’ll also want savings to cover inevitable repairs.

“The total cost of a home is much greater than your monthly payment,” says Ribe. “There are some maintenance and homeownership costs, mortgage insurance, property taxes, etc. … so make sure you have some money set aside after you cover your down payment to take care of those types of contingencies.”

If your monthly student loan payments are standing in the way of your ability to build a hefty rainy-day fund, consider holding off on a home purchase until your cash reserves can adequately cover repairs and other emergencies.

Are You Contributing to Your Retirement?

Purchasing a house may be a personal goal and may even be a good investment, but don’t let it completely replace your retirement savings. If your employer is matching your contribution, at a minimum you should be contributing at least as much as your employer match annually to ensure you aren’t leaving free money on the table.

Remember that contributions to your retirement account in your 20s provide far higher returns than those made in your 40s. That said, once you’ve covered your employer match, it may make sense for you to buy a home or pay off high-interest student loans instead of investing more in your retirement account. That will depend on your income, tax bracket, investment returns and other personal factors.

How’s Your Credit Score?

The best mortgage rates go to buyers with excellent credit scores (above 740). But if your score is below 680, you may be better off waiting to buy a home until you have a chance to improve it.

Paying your student loans on time each month and never missing payments helps you earn a better credit score. Student loans also add to your credit mix of installment and revolving loans, which can have a small beneficial impact on your credit score, according to FICO.

When you pay off your student loans in full, it helps lower your DTI, but your credit score may dip slightly if you don’t have another installment loan in good standing on the books. In this scenario, to keep a good mix of credit after your loans are paid off, you might consider applying for credit in the form of a mortgage – if your financial circumstances allow. If not, focus on paying down your other debt and getting your credit utilization below 30% on each account.

Can You Get a Good Mortgage Rate?

Usually, getting the most favorable mortgage terms requires 20% down, but not always. “There are a number of first-time homebuyer mortgage products that are attractive in terms of being able to purchase a home with a low down payment at a good rate,” says Ribe. Just make sure you plan to stay in the home long enough to build some equity.

If you can’t get a good mortgage rate, your focus should be on paying down your student loans and shrinking your DTI. This could increase your chances of getting a better rate when you finally apply for a home loan.

Do You Plan to Live in the Home for the Foreseeable Future?

The longer you plan to own a home, the greater your chances of building equity. If you aren’t quite sure where you want to settle down or envision a job transfer out of the area, for example, it may be best to wait.

“Anything less than five years, you’re going to want to rethink your options,” Ribe says. So, if there’s a pretty good chance you’ll move soon, focus on paying off your student loans.

In the end, choosing whether to pay off your student loans before buying a house is both a financial and personal decision. “There’s no one-size solution that fits everyone, so I encourage people thinking about this to speak with an expert counselor,” advises Ribe. You can find a counselor through the National Foundation for Credit Counseling website.

~Mary Purcell

Twenty-Five Tips for First-Time Home Buyers

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Buying a home can be nervewracking, especially if you’re a first-time home buyer. Not only is it probably the biggest purchase of your life, but the process is complicated and fraught with unfamiliar lingo and surprise expenses.

To make the first-time home buying journey a little less stressful, NerdWallet has compiled these 25 tips to help you navigate the process more smoothly and save money.

1. Start saving for a down payment early
It’s common to put 20% down, but many lenders now permit much less, and first-time home buyer programs allow as little as 3% down. But putting down less than 20% may mean higher costs and paying for private mortgage insurance, and even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000. Play around with a down payment calculator to help you land on a goal amount. Some tips for saving for a down payment include setting aside tax refunds and work bonuses, setting up an automatic savings plan and using an app to track your progress.

2. Check your credit
When you’re taking out a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and possibly the loan terms. So check your credit before you begin the home buying process. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts.

3. Pause any new credit activity
Any time you open a new credit account, whether to take out an auto loan or get a new credit card, the lender runs a hard inquiry, which can temporarily ding your credit score. If you’re applying for a mortgage soon, avoid opening new credit accounts to keep your score from dipping.

4. Determine how much home you can afford
Before you start looking for your dream home, you need to know what’s actually within your price range. Use a home affordability calculator to determine how much you can safely afford to spend.

5. Explore your down payment options
Struggling to come up with enough money for a down payment? First-time home buyer programs are plentiful, including federal mortgage programs with Fannie Mae and Freddie Mac that allow loans with only 3% down, plus Federal Housing Administration loans and Veterans Affairs loans. You could also try crowdfunding or asking if family members are willing to pitch in with a gift.

6. Research state and local assistance programs
In addition to federal programs, many states offer assistance programs for first-time home buyers with perks such as tax credits, low down payment loans and interest free loans up to a certain amount. Your county or municipality may also have first-time home buyer programs.

7. Budget for closing costs
In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent’s commission.

8. Set aside more money for after move-in
Sorry, that’s not all you need to save up for before home shopping. Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any other touches you’ll want to have when you move in.

9. Consider what type of property to buy
You may assume you’ll buy a single-family home, and that could be ideal if you want a large lot or a lot of room. But if you’re willing to sacrifice space for less maintenance and extra amenities, and you don’t mind paying a homeowners association fee, a condo or townhome could be a better fit.

10. Research mortgage options
Is a 30-year, fixed rate mortgage a given, or is another loan type right for you? If you can afford larger monthly payments, you can get a lower interest rate with a 20-year or 15-year fixed loan. Or you may prefer an adjustable-rate mortgage, which is riskier but guarantees a low interest rate for the first few years of your mortgage.

11. Compare mortgage rates
Many homebuyers get a rate quote from only one lender, but this often leaves money on the table. Comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan, according to the Consumer Financial Protection Bureau. Get at least three quotes and compare both rates and fees.

12. Decide if paying points makes sense
Lenders often allow you to buy discount points, which means prepaying interest upfront to secure a lower interest rate. There may also be an option for negative points, in which the lender pays some of your closing costs in exchange for a higher interest rate. How long you plan to stay in the house is one of the key factors in whether buying points makes sense. You’ll need to do some calculations or speak to a mortgage broker or loan officer to help you decide if buying points is worth it for you.

13. Get a preapproval letter
You can get prequalified, which simply gives you an estimate of how much a lender may be willing to lend based on your income and debts. But as you get closer to buying a home, it’s smart to get a preapproval, where the lender thoroughly examines your finances and confirms in writing how much it’s willing to lend you and at what terms. Having a preapproval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.

14. Hire the right buyers agent
You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right buyers agent should be highly skilled, motivated and knowledgeable about the area.

15. Stay under your preapproval limit
As your agent shows you homes, look for properties that cost a little less than the amount you were approved for. While you can technically afford that amount, it’s the ceiling — and it doesn’t account for a broken washer or dryer or any other expenses that arise during homeownership, especially right after you buy. Rather than maxing out that amount, set a lower purchase budget to leave yourself wiggle room for unexpected costs.

16. Pick the right neighborhood
Finding the right neighborhood is just as important as locating the right house. Research the schools, even if you don’t have kids, since that affects a home’s value. Look at local safety and crime statistics. How close are the nearest hospital, pharmacy, grocery store and other amenities you’ll use? Also, drive through the neighborhood on various days and at different times to check out traffic, noise and activity levels.

17. Make the most of an open house
Use this as another opportunity to scope out the neighborhood and your potential neighbors. During the open house, pay close attention to the home’s overall condition and look for any smells, stains or items in disrepair. Ask a lot of questions about the home, such as when it was built, when items were last replaced and how old key systems like the air conditioning and the heating are. If several other potential buyers are viewing the home at the same time as you, don’t hesitate to schedule a second or third visit to get a closer look and ask more questions.

18. Buy a home for tomorrow
It’s easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home you can grow into. Consider your future needs and wants and whether this home will suit them.

19. Let little things go
When you’re looking at a home, it’s easy to get caught up on superficial details like paint color, fixtures and carpets. These features are easy to change once the home is yours, so don’t let those little details get in the way.

20. Be prepared to compromise
It’s rare to find a house that’s perfect in every way, so think carefully about what you’re willing to compromise on and what you’re not. Perhaps no walk-in closet in the master bedroom is a deal breaker, but an outdated guest bathroom will be tolerable until you can renovate it.

21. Make a strong offer
Your real estate agent can help you with this, but consider how much under or over the asking price you’re willing to pay to obtain your dream home. If there are multiple bids, think about tactics to win over the seller, such as a personalized letter.

22. Avoid a bidding war that blows your budget
In a competitive real estate market with limited inventory, it’s likely you’ll bidding on houses that get multiple offers. When you find a home you love, it’s tempting to make a high-priced offer that’s sure to win. But don’t let your emotions take over; stick to your purchase budget to avoid getting stuck with a mortgage payment you can’t afford.

23. Negotiate
A lot can be up for negotiation in the homebuying process, which can result in major savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyers market, you may find the seller will bargain with you to get the house off the market.

24. Buy homeowners insurance
Before you close on your new house, your lender will require you to buy homeowners insurance. Shop around and compare rates to find the best price. Look closely at what’s covered in the policies; going with a less expensive policy usually means fewer protections and more out-of-pocket expenses if you file a claim. Be aware that your insurer can drop your property if it thinks the home’s condition isn’t up to snuff, so you may have to be prepared to find a new policy quickly if it sends someone out to look at the property and isn’t happy with what it finds. Also, flood damage isn’t covered by homeowners insurance, so if your new home is in a flood-prone area, you may want to buy separate flood insurance.

25. Know the limits of a home inspection
Once your offer is accepted, you’ll pay for a home inspection to examine the property’s condition inside and out. But not all inspections test for things like radon, mold or pests, so be sure you know what’s included. Make sure the inspector can access every part of the home, such as the roof and any crawl spaces. Attend the inspection and pay close attention. Don’t be afraid to ask your inspector to take a look — or a closer look — at something and ask questions. No inspector will answer the question, “Should I buy this house?”, so you’ll have to make this decision after reviewing the reports and seeing what the seller is willing to fix.

~Emily Starbuck Crone

The Seattle Area Housing Market: Big Demand, Little Supply

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Home buyers in the Seattle area are up against the toughest purchasing prospects in the country.

The Seattle Times cited the monthly Case-Shiller home price index, which showed a 12.3-percent year-over-year increase for single family home prices in the metro area in March. It’s the fastest growth in more than three years and easily outdistances increases in Portland (9.2 percent), Dallas (8.6 percent), Denver (8.4 percent) and Boston (7.7 percent).

Seattle also more than doubles the national average for price gains, which are at 5.8 percent.

Seattle-based real estate company Redfin released its Demand Index on Tuesday, and it shows what buyers are certainly learning the hard way as prime selling season approaches — there just aren’t enough houses available for interested parties.

Seattle is the most inventory-constrained metro, as measured by months of supply, but it also has the third smallest amount of inventory, following Oakland and San Francisco, Redfin said. Seattle posted the largest year-over-year decrease in inventory, down 35 percent from last April. In the same period, the number of Redfin customers making offers climbed by 36.9 percent, an indication that the market is more competitive for buyers this year than it was last year.

“There’s no indication that this market is going to see a drastic increase in supply or a drop in demand, so waiting isn’t an option for a serious buyer,” said Redfin Seattle agent Kyle Moss in the company’s blog post. “People intent on purchasing this season should be discerning and focus on the one or two criteria that are most important to them, like commute time and/or schools. From there, carve out a list of homes that meet your qualifications and work alongside an agent who has experience winning offers in competitive situations to build and execute a competitive strategy that fits your budget.”

That inventory crunch, in a city attracting thousands of new well-paid tech workers to companies such as Amazon, Facebook, Google, Expedia and others, is leading to the highest rate of bidding wars among the cities that Redfin tracks in other hot markers. In Seattle in April, 88.7 percent of homes received multiple offers, outpacing Los Angeles (79.3 percent), Oakland (78.6 percent), San Diego (77.5 percent) and Washington, D.C. (73.9 percent) among others.

The Times said extra offers often drive prices higher, and the typical single-family house in the city last month sold for a record $722,000.

~Kurt Schlosser, Geekwire

Seattle’s Hot Housing Market

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Seattle home values continued their seemingly endless ascent last month, reaching a median sale price $630,800. That’s up 14 percent from sales in March 2016.

The numbers are even more extreme when you exclude condos. The median sale price for houses in Seattle in March was $700,000, nearly a 10 percent increase year-over-year. For condos — an increasingly attractive option for buyers working with less cash — the median sale price in March was $434,000.

There are a number of factors contributing to Seattle’s feverish housing market. One is, undeniably, a rapidly growing population of high-paid workers drawn to the region for tech jobs. Those people need homes and can afford to pay more for them.

“We are seeing more multiple offers than ever on new listings, and all cash offers are dominating the winning bids,” John Deely, Northwest MLS chairman and principal managing broker at Coldwell Banker Bain, said in a press release. “Last year they were advising a buyer to bid 10 percent above the list price, this year they’re advising 20 percent over in certain Seattle neighborhoods.”

These trends aren’t just restricted to Seattle. In Greater King County, the median price for all residences rose to $530,000, a more than 15 percent increase year-over-year. For single-family homes, it was about $600,000. Snohomish and Pierce counties saw eight and 11 percent increases, respectively.

~Monika Nickelsberg

Will White House Uncertainty Affect Housing Market?

content_dreamstime_m_27154591.jpgWindermere Real Estate Chief Economist, Matthew Gardner, was interviewed by real estate industry news leader, Inman News, on what impact recent White House turmoil could have on the U.S. housing market. This is what he had to say:

Gardner says housing will be isolated from recent events, at least for now. “Financial markets hate one thing more than anything else, and that is uncertainty,” Gardner told Inman. “Yesterday’s sell-off was a clear response to the appointment of a special counsel and markets were clearly on edge.

“As far as housing goes, the downside will likely be muted, at least for the time being. Yesterday’s news headlines cast further doubt on the new administration’s ability to rapidly enact the legislation that prompted investors to make big bets on higher stocks and interest rates.

“Unsurprisingly, investors pushed stocks and interest rates lower following the news. This triggered mortgage rates to drop significantly, as part of the broad-based sell-off in equities. At least for the time being, I do not see any long-term housing related issues following the political turmoil that currently embroils Washington.”

You can find insights from other industry leaders in the full article here: White House Uncertainty

The Myth of the 20% Down Payment


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A survey by Ipsos found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. There are two major misconceptions.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 40% of consumers think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

The survey also revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

20170403-KCM-ENG-1The average conventional loan closed in February had a credit score of 752, while FHA mortgages closed with a score of 686. The average across all loans closed in February was 720. The chart below shows the distribution of FICO® Scores for all loans approved in February.

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, sit down with a professional who can help you understand your true options.

~Keeping Current Matters

2018 Decorator Trends; Pantone’s Predictions

It seems like 2017 only just started, but designers and color trend forecasters are already looking ahead to the next year. The Pantone Color Institute’s predictions for what design trends will be hot in home design for 2018, including fringe, geometric patterns, and iridescent accents. Here are the six home trends that it predicts will rise to the top, and the shades that are sure to be hot in the coming year.

 

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Geometric patterns
There are so many ways you can incorporate geometry into your decor; it’s one of the most approachable trends of the bunch. “We’ll see geometrics in everything from tile on backsplashes to wallpaper to wall art,” says interior designer Larina Kase of Philadelphia. Focus on a single accent wall, or really go for it by wallpapering your entire dining room or bathroom. You can also start small with pillows or throws in geometric prints.

Typography
Pillows with words, framed art saying “EAT” … the typography trend is still around and going strong. “Messaging on home goods has been popular for some time now,” says Homepolish interior designer Michelle Gage. “It’ll become increasingly popular, given the way we all communicate on social media. It will remain more of a complement to a room’s story and live on in smaller finishing touches like pillows and art.”

Wood treatments
The presence of technology, especially a year from now, will have us craving natural elements like wood more than ever. Kase expects to see wood in unexpected places like ceilings and as accent walls. “Utilitarian pieces such as lamps and pots for plants are great places for natural wood. Hand-carved wood bowls offer a natural, simple yet powerful element,” she adds.

Fringe
“Fringe is going to be a hot home trend,” says Gage. We’re currently seeing it in decorative throw pillows and blankets, but Gage says to keep your eye out for this trend on small furniture pieces like footstools and ottomans. “I wouldn’t be surprised if we started to see it on curtains. I could also get behind some fringe light fixtures!” she says.

Metallics
Another trend that’s ramping up now and is destined to carry over until next year is that of metallics anchoring a room. Kase says metallics may take a more dominant role, with furnishings like coffee tables and dining tables. Try offsetting a traditional upholstered sofa with an all-metal side table. “Hand-painted metallic elements on fabrics and art will add an artistic flair,” says Kase.

Iridescent accents
This is by far the most futuristic look of the group.

“The iridescent trend is one of our favorites,” says Lizzie Grover, creative director of Hutch, an interior design resource for millennials. “We love to admire all of the iridescent tables and decorative pieces.” (For example, this side table from ABC Home & Carpet.) “Unfortunately this trend is still pretty under the radar and expensive,” she adds. “Wait for this trend to get more affordable before you indulge.”

~Natalie Way, Realtor.com

How to Find a Starter Home in a Hot Housing Market

An overheated real estate market can be a tough time for buyers in search of a budget-friendly starter home. But that’s exactly the type of real estate market 2017 is ushering in.

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According to a recent report from the National Association of Realtors (NAR), the share of households that believe the economy is improving soared to 72% in the first quarter of 2017. “Forty-seven percent believe that strongly, up from 45% in Q4 2016 and 44% one year ago in Q1 2016,” NAR said.

When there’s increased competition for homes, prices generally go up. (Go here to see how much house you can afford.)

The fastest way to save for a house
A new report from Redfin bears this out, revealing home prices in February increased 7.2% from a year earlier. What’s more, homes priced for less than $240,000 witnessed the highest appreciation — skyrocketing 8.4% year over year in February and 100% since the market lagged in 2012.

Combined with a lack of housing stock — Redfin reports a 6.4% decline in new listings in February — and you have what might be a daunting buying experience for newcomers.

With that in mind, here are five tips from experts on how best to snag a starter home right now.

1. Work with a professional

This may seem like less-than-helpful advice, but it’s the first suggestion most experts offer when discussing the predicament faced by first-time home buyers.

“You want someone who knows the neighborhood,” said Jessica Lautz, managing director of survey research and communications for NAR. “It could be difficult if you go it alone.”

Seek out an agent who is knowledgeable about the areas in which you’d like to search so you can help avoid these first-time homebuyer mistakes.

2. Get pre-approved before starting a search

Before discussing the pre-approval issue, it’s important to sort out your finances and to do it before embarking upon a search.

This effort should include reviewing your credit score. If it’s less-than-stellar, you can reach out to lenders for tips regarding how best to improve it, said Boston-based Redfin real estate agent James Gulden. You can view two of your credit scores for free, with helpful updates every two weeks, on Credit.com.

7 tricks to use when refinancing a mortgage
“Sometimes people see their credit score and don’t know where to go from there,” said Gulden. “All lenders have different thresholds for what they’re willing to take on in terms of a buyer’s credit score. And they will also look at your employment profile.”

When you’re ready, it’s wise to obtain pre-approval for a mortgage before wading into the market. Not only will it ensure you lose no time when you’re ready to make an offer, it will help clarify what you can realistically afford.

3. Be prepared to make compromises

Even seasoned, older buyers make compromises. Whether it’s the price, condition or amenities, compromising is part of the process.

“It’s more common for millennials to make compromises on first homes, but all buyers really do compromise on something,” said Lautz.

Translation: Figure out what you are willing to let go of or do without.

4. Be patient

Buying a home is a process, no matter how much money you have. So mentally prepare yourself for the process, including the ups and the downs. Preparing for the downs includes not getting too attached to any one house.

“It’s easy to lose a couple and say, ‘Forget this, we’ll keep renting,’” said Gulden. “A lot of people are losing out on the first five or six homes they submit an offer on before being successful. From a mental standpoint, it’s very easy to get connected to a place, and when you don’t win a place, it can be upsetting. But in this market, it’s important to be able to brush it off and realize there are other places that will be coming onto the market.”

5. Write a personal letter

Gulden admitted this tip is not exactly novel, but it can give you an edge in a particularly competitive market.

Writing a personal letter to the seller, enclosed with your offer, can help set you apart when there are 10, 15 or even 20 more offers. And those numbers are no exaggeration, said Gulden, who recently helped clients submit an offer for a Cambridge property with 24 bids.

“If you don’t include a letter or something to differentiate yourself from others, then it’s all just numbers and dates on paper for the seller,” said Gulden. “Introducing yourself and telling the buyer who you are, why you like the property makes a big difference.”

~Mia Taylor, USA Today

Buying Is Now Thirty-Seven Percent Cheaper Than Renting

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The results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers actually show that the range is an average of 17.4% less expensive in Honolulu (HI), all the way up to 53.2% less expensive in Miami & West Palm Beach (FL), and 37.7% nationwide!

Other interesting findings in the report include:
Interest rates have remained low, and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.

Home prices would have to appreciate by a range of over 23% in Honolulu (HI), up to over 45% in Ventura County (CA), to reach the tipping point of renting being less expensive than buying.
Nationally, rates would have to reach 9.1%, a 145% increase over today’s average of 3.7%, for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.
Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.

~Courtesy “Keeping Current Matters”

The Cost of Waiting

The “Cost of Waiting to Buy” is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
Freddie Mac predicts that interest rates will increase to 4.8% by this time next year, while home prices are predicted to appreciate by 4.8% according to CoreLogic.
Waiting until next year to buy could cost you thousands of dollars a year for the life of your mortgage!

 

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