Affording a Home

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affording a home, buying your first home, first-time homebuyer, home affordability, homes for sale, Homes in Jacksonville FL, interest rates, interest rates rising, renters, tenants

Home shopping can be tough when you’re not sure how much you can afford. If you’ve wanted to live the dream of owning your own home, but haven’t been sure where to start, we’ve put together a few tips that can make it easier to get a handle on where to start.

1. Tax benefits usually mean you can afford more than your rent. Interest deductions on taxes typically translate into significant savings. Many people find they can afford about 33% more than their current rent. To get an idea of what this might be for you, multiply your current rent by 1.33.

2. A home price two-to-three times your gross income is usually a reasonable place to begin. For example, if your household made $75,000 last year, you could begin looking in the $150,000 – $225,000 range to start.

3. Know how much you can put down. Ideally, you’d want to have 20% of the home’s price set aside for a down payment. On a $200,000 home, this would be roughly $40,000. While people qualify with less, it can result in higher interest rates (which translate to higher monthly payments).

4. Determine your “debt factor.” Lenders will often cite the 28/41 rule when it comes to your debt. This means that your mortgage (plus taxes and insurance) shouldn’t exceed 28% of your gross monthly income. Your total payments (credit card, car loan, etc.) plus your mortgage shouldn’t come to more than 41% of your gross monthly income.

We often work with first-time buyers and renters to get themselves lined up for home ownership. If you’d like to learn more, or have questions, we’re happy to help.  Kevin and Jennifer Hanley, REALTORS, The Hanley Home Team – http://www.HanleyHomeTeam.com 904-515-2479

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Homebuyers need to act now

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buy now, homes for sale in Jacksonville FL, interest rates, interest rates rising, Jacksonville, mortgage rates, the time to buy is now

CHICAGO – Feb. 4, 2015 – Homebuyers need to move fast if they want to spend less, according to Jonathan Smoke, chief economist at realtor.com.

“Delayed purchases will only result in higher monthly mortgage payments as prices and rates rise,” Smoke writes. Realtor.com forecasts that affordability may decline as much as 10 percent over the year.

The Federal Reserve continues to remind the financial markets that it plans to raise its target federal funds rate this year, which will cause mortgage rates to rise. Many economists predict that 30-year fixed-rate mortgages will average near 5 percent by the end of the year.

For now, mortgage rates are near historical lows for homebuyers and homeowners. Freddie Mac reported last week that the 30-year fixed-rate mortgage averaged 3.66 percent (last year at this time it averaged 4.32 percent), and 15-year fixed-rate mortgages averaged 2.98 percent (a year ago, it averaged 3.40 percent).

“Right now, the Fed is using the word ‘patient’ to describe its approach to picking the time to raise the target rate,” Smoke notes. “However, when the Fed ‘loses patience,’ rates will go up at least 20 to 40 basis points in anticipation of the target rate officially going up. … So, buyers beware: The clock on these low mortgage rates may be ticking.”

Source: “2015: Buy Now, Before the Fed’s Patience Ends,” realtor.com® (Jan. 30, 2015)

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