Should I Wait to Put Down a Bigger Down Payment?

Some experts are advising that first time and move-up buyers wait until they save up 20% before they move forward with their decision to purchase a home. One of the main reasons they suggest waiting is that a buyer must purchase private mortgage insurance if they have less than the 20%. That increases the monthly payment the buyer will be responsible for.

In a recent article, Freddie Mac explained what this would mean for a $200,000 house:

However, we must look at other aspects of the purchase to see if it truly makes sense to wait.

Are you actually saving money by waiting?

CoreLogic has recently projected that home values will increase by 4.3% over the next 12 months. Let’s compare the extra cost of PMI against the projected appreciation:

If you decide to wait until you have saved up a 20% down payment, the money you would have saved by avoiding the PMI payment could be surpassed by the additional price you eventually pay for the home. Prices are expected to increase by more than 3% each of the next five years.

Saving will also be more difficult if you are renting, as rents are also projected to increase over the next several years. Zillow Chief Economist Dr. Svenja Gudell explained in a recent report:

"Our research found that unaffordable rents are making it hard for people to save for a down payment ... There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage."

Laura Kusisto of the Wall Street Journal recently agreed with Dr. Gudell:

“For some renters there may be a way out: Buy a house. Mortgages remain very affordable.”

Mortgage rates are expected to rise…

Freddie Mac is projecting that mortgage interest rates will increase by almost a full percentage point over the next 12 months. That will also impact your mortgage payment if you wait.

Bottom Line

Sit with a real restate or mortgage professional to truly understand whether you should buy now or wait until you save the 20%.

Schedule your homebuyers consultation with The J Team Fort Lauderdale today at 954-235-3589!

Search Fort Lauderdale Homes for sale today at http://JTeamFL.com

1st Time Buyers Finally Crashing the Real Estate Party

There has been much conversation regarding the lack of first time home buyers in today’s real estate market. However, three recent reports seem to suggest that they are now entering the market in increasing numbers.

The most recent Existing Home Sales Report from the National Association of Realtors(NAR) reported that:

“The percent share of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers.”

And, in a recent Washington Post article, Ken Harney revealed that:

“According to a June 19 Campbell/Inside Mortgage Finance tracking survey, which polls 2,000 real estate agents nationwide, first-time buyers accounted for nearly 39 percent of home purchases in May; that’s the highest level since August 2010.”

Also, according to American Enterprise Institute's International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), the share of first-time buyers stood at an estimated 52.2 percent.

Lawrence Yun, the Chief Economist at NAR explained:

"The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs."

Bottom Line

It seems that the number of first time buyers is increasing for the first time in a long time. This further lends credence to the fact that the residential housing market is back.

Are you a first time home buyer?  The J Team Fort Lauderdale is here to help guide you with our Buyers Consultation, we explain the home buying process and what to expect, help you pre-qualify with a mortgage, and conduct a needs analysis to help uncover your needs and wants in homes.  Contact The J Team Fort Lauderdale today at 954-235-3589 and schedule your home buyers consultation.

Search Fort Lauderdale Homes for Sale now at http://JTeamFL.com