How much house can I afford?
This is usually the first question that pops up when thinking about buying a house. To find this number out you can go online and plug your information into a mortgage calculator, or even better, you can go to your bank and request a pre-approval for a loan.
The good news: mortgage rates haven’t moved much this year, and they have been stuck at historically low levels. The bad news: that may change soon.
Both home prices and mortgage rates are expected to rise as we head through the year. This increase will make shopping for the right mortgage all the more critical. Many groups report the national mortgage rate averages weekly, the rates you get can vary considerably from the average, and depending on what product you choose. So how do you get the best rate? Here are some tips to help you shop.
Purchasing a home as a first time buyer is not quite as easy as it use to be. Proof of this can be seen in the huge dip in first time buyer purchases, which is at its lowest point in 27 years. “Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the work force,” says NAR Chief Economist Lawrence Yun. “Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”
Along with it being more difficult for younger people to afford a home, people who have purchased a home in the past are staying there longer. This limits the inventory that first time buyers have available to them.
Despite the negative aspects going against these buyers, there does seem to be some relief on the way. One form of relief is low down payment options. Fannie/Freddie is currently working on an option for borrowers to put only 3% down on homes, with the loan maxing out at $417,000.
Low credit score options may also help. The average credit score on the loans Fannie/Freddie is buying today is about 740, but they will buy loans with credit scores as low as 620. As with low down payment options, it’s up to the individual lender to decide whether to layer more stringent requirements on top of Fannie/Freddie guidelines, so be sure to ask your lenders.
As a first time home buyer, the process can be complicated and overwhelming. At Hapa Realty, we’ll help you navigate the real estate market and find the best option for you and your budget.
Give us a call or shoot us an email any time to get the conversation started and see how we can help you make your dream of home ownership a reality.