If you’re thinking of buying a home in our market, now might be the time to take action, and there are a few reasons why.
First, there are two main real estate myths that keep people from buying homes in our market in the first place that I want to dispel.
The first is that you need to put down at least 20% for your down payment. Not only is this not true, but there are loan programs out there that require far less than 20%. FHA loans, for instance, only require as little as 3.5% down. Some conventional loans only require 3% down. USDA loans don’t require any money down at all. Some lenders will also loan you money for your closing costs if you’re a first-time homebuyer.
The second myth is that you need a FICO score of at least 750 to qualify for a loan. On the contrary, over half (53.5%) of all loans are given with credit scores between 600 and 750.
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If you’re planning on buying a home but you want to wait, you might be in for a surprise. Right now, interest rates are very low and hovering between the high 3% and low 4% range. By the end of this year, however, they’re projected to climb closer to 5%.
What does this mean in terms of dollars and cents? If you’re looking to buy a home for $250,000 and you lock in a loan with a rate of 3.9% right now, your principal and interest payment for that home would only be $1,179 per month. If you waited until the end of the year to purchase that same home, our central Florida market’s 10% rate of appreciation will have increased its price to $261,750. Furthermore, if you have to lock in a loan rate of 4.5% or 4.6% instead of 3.9%, your principal and interest payment would increase to $1,341 per month. That’s a difference of $162 each month. There’s a lot you could probably do with an extra $162 in monthly savings.
As you can see, you don’t have to wait to buy a home if you’re ready now. The fact is, you can’t lock in a low mortgage rate if you don’t have a property.
The cost of renting is another factor to consider. Historically, the percentage of income needed to afford the median cost of rent has been 25.8%. Now, that percentage has increased to 29.2%. The percentage of income needed to afford a median home, on the other hand, has dropped from its historical average of 21% to just 15.8% right now. The reason for this decrease is interest rates are so low.
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You owe it to yourself to consider making the leap from renting to homeownership. One way or another, you’re paying someone’s mortgage.
It’s a great market for homebuyers out there, so if you have any questions about what it would take for you to buy a home or you need an agent to help you become a homeowner, don’t hesitate to give me a call or shoot me an email. I’d love to help you.