Rents have gotten so high a mortgage might be surprisingly affordable
of ConsumerAffairs
More renters are giving up on owning a home. A new CNN poll found that 54% of renters who say they dont think buying a home will ever be in their future are among the 90% of renters who have found homeownership is out of reach.
But at the same time, a new study from real estate marketplace Zillow has identified nearly 8 million current renters who could afford a home purchase without paying more than 30% of their income each month.
The key caveat is if the renters are what Zillow calls mortgage ready. That means having at least a minimal down payment and a pre-qualification letter from a lender. Having a small amount of existing debt is also a big help.
In the weeks ahead, conditions might improve for even more renters. The Federal Reserve is believed to be on the cusp of its first interest rate cut in years. While that wont affect mortgage rates directly, the trickle-down effects could at least keep rates in check.
At the same time, home sales have slowed to a crawl. The U.S. Census Bureau reports sales of new homes dropped in June from May, and the median sale pricealso declined.
Sales of existing homes fell 5.4% in June and down by the same percentage year-over-year. Declining sales may lead to a growing inventory of existing homes, and that could finally put downward pressure on prices.
A buyers market?
We're seeing a slow shift from a seller's market to a buyer's market, said Lawrence Yun, chief economist for the National Association of Realtors. Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.
How can you know if you can afford to buy a home? Here are the important factors:
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Dependable income: Lenders like to see you employed in the same field for at least two years.
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Credit score: The higher your credit score, the lower your mortgage rate.
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Debt-to-income-ratio: This is the percentage of your monthly income that goes toward debt payments.
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Down payment: The more you can put down, the better. If you can only put up 5% of the purchase price, the monthly payment might be too much of a burden.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-07-30 21:26:31
