Are you a first time home buyer? Here some food for thought.... Many Millennials face unexpected hurdles when looking to purchase a home for the first time such as not being able to qualify for a loan due to student debt, low starting salary and the inability to come up with a large down payment. Zillow analyzed how affordable it is for the average millennial or first-time buyer, given their economic hardships, to purchase a home in certain metro areas. To analyze the data, Zillow assumed that the average first-time buyers makes the median income of $54,000, attains a 30-year fixed rate mortgage with only 5% down and looks for a home priced according to the 33.3 percentile of all home values. Most first time home buyers put less than 20%, so primary mortgage insurance and upfront fees have to be considered and in Q3 of 2014, MI added an average of 1.3 percentage points to the effective mortgage rate. First-time home buyers should expect to pay about 17.4% of their income on a mortgage, compared to 15.3% for more traditional buyers. Despite the hurdles that most millennials face, current affordability for first-time buyers still looks more favorable than the pre-bubble standards from 1985 to 1999, when they could have allocated 22.5% of their income to a mortgage. You can utilize the interactive map to determine how first-time home affordability compares in your area. A little farther up the age scale, A survey by the Demand Institute finds 63% of Baby Boomers say they plan to stay in their current home when they retire. Of those who said they plan to move, 42% said they would buy a smaller home, 32% said they would buy a larger home and 26% said they plan to buy a the same size home.
Posted on: Mon, 15 Dec 2014 17:46:04 +0000
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