Buying a Home - Time Required to Save for Down Payment
Many potential homebuyers are now making sacrifices to save for that all-important down payment. Sometimes it's really tough to maintain that saving program.
That's especially true for young first-time buyers and seniors. A study of these buyer groups was completed recently and reported by the National Association of Realtors.
"Millennials and retirees tend to save for the longest amount of time in order to put a 10 percent down on a home, according to the study. More specifically, younger millennials aged 18 to 24 -- who are usually recent college graduates -- will have to save the longest, at an average of 8.77 years, in order to save enough for a 10 percent down payment on a home costing $221,600."
The report noted that retirees aged 65 and over will take, on average, about 7.37 years to save up for a down payment on a $291,000 home.
"Seventy percent of millennials who do not yet own a home expect to become home owners by 2020, and most expect to use the money they have saved for a down payment, according to a survey of 1,270 members of Gen Y aged 19 to 36 conducted by the Urban Land Institute."
The report found that contrary to popular belief, the majority of millennials are not settling into downtowns of large cities but are living in less centrally located, more affordable neighborhoods. Also, they're "making ends meet with jobs for which many feel overqualified and living with parents or roommates to save money," according to the report.
"Still, despite their current lifestyle constraints, most are optimistic about the odds for improving their housing and financial circumstances in the years ahead. Gen Y consists of nearly 79 million people and is the largest generation in U.S. history, even larger than the Baby Boomers."
The survey found that many millennials are still renting, paying a median rent of $925, with the majority living in city neighborhoods or in the suburbs, and only 13 percent living in or near downtowns. Nearly a quarter of those surveyed are still living at home with their parents or other family members.
Q: Are more prospective homebuyers holding back their purchase considering an imminent rise in interest rates?
A: A rise in mortgage interest rates is having little effect on homebuyers, according to most analysts. The Federal Reserve's rise in rates will have little impost on potential homebuyers' behavior, according to a new Zillow survey.
"Most people (70 percent) who say they are currently searching for a home or plan to buy within the next year will continue with their home buying plans even if rates rise to 4.5 percent -- roughly where economists expect they will be by mid-2016," according to the report.
"While plans to purchase will remain intact, almost half (45 percent) of current home shoppers claim they would reconsider the type of home they are searching for, such as looking for a smaller home or less expensive community, should this 50 basis point increase in mortgage rates occur."
Q: Is commercial mortgage lending still rising?
A: Yes, banks are reporting continued increases in commercial mortgage applications.
"The level of commercial/multifamily mortgage debt outstanding increased by $38 billion in the third quarter of 2015, as three of the four major investor groups increased their holdings. That is a 1.4 percent increase over the second quarter of 2015, it was reported by the Mortgage Bankers Association.
"Total commercial/multifamily debt outstanding stood at $2.76 trillion at the end of the third quarter. Multifamily mortgage debt outstanding rose to $1.02 trillion, an increase of $19.3 billion, or 1.9 percent, from the second quarter."
Q: In the wake of rising mortgage rates, what are projected home sales in 2016?
A: Most economists are optimistic. Mike Fratantoni, the Mortgage Bankers Association's Chief Economist and Senior Vice President for Research and Industry Technology, offered the following statement in response to the Federal Reserve's action to increase rates.
"MBA has been projecting a rate increase all year and we have factored rising mortgage rates into our 2016 mortgage finance forecast. Due to the strength of the economy, we still project 10 percent growth in the purchase market in 2016, despite gradually increasing rates."
Editor’s Note: THIS COLUMN WAS PREVIOUSLY PUBLISHED IN 2015
Jim Woodard's email: email@example.com.
COPYRIGHT 2017 CREATORS.COM.
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