Interest rates are lower than ever, Edmond homes more affordable than in the past 35 years, and the monthly gross income allocated for the mortgage payment is at around 17%, so what's the roadblock for buyers? Access to credit and higher down payments!
Though homes are selling in this buyers' market, it's rare that a buyer won't need some financing. And that's the problem. Credit scores must be in the 700s with higher being better. The Zillow website reports even those scores won't always guarantee a loan.
When lending standards tightened after the subprime trend, it necessarily increased the access to loans. Research from the Federal Reserve indicates that over a quarter of all mortgages in 2006 were subprime, meaning buyers with credit scores below the 620-660 range were given loans. In addition, these buyers put little money down. Buyers in this range account for one-third of the U.S. population.
Lenders will look at your debt-to-credit ratio, your employment record and essentially your ability to pay back the loan. Lenders want to be sure that you will pay on time. They truly want to give loans to qualified buyers. But many of the subprime loans have failed and lenders do not want to be in the business of foreclosure on homes.
In addition, higher down payments are required. This may not sound like good news, but it's really in the buyer's best interest. More money down means closing cost savings.
Is the housing market timely now? Absolutely! This is not a tale of woe, but of possibilities. As stated previously, 17% goes towards mortgages which is an average 8% less than in 1975. In the 1980s, interest rates were so high, close to 20 percent, making about 45% of gross income the base for mortgage payments per month.
These low interest rates of today equal lower monthly payments. Higher down payment equals savings in closing costs. So in this market, owning a home is much more available for an average buyer.
How can this benefit you? Good credit with scores over 700, little debt, and buying a house you can afford. Look at your monthly gross income and figure that 17% for your mortgage. Remember to tally the amount for insurance and taxes. Then review your total debt in credit cards, car payments or other loans.
The main road blocks to buying a home in today's market are credit access, as well as the higher down payment. Does this indicate that you will find getting that loan tougher?
Yes it may be difficult. However, good credit, employment history, savings and small debt, can put you on the path to owning a home within your budget. It is a buyer's market. Take advantage of it now.
If I can help you with buying your home in Moore, Edmond, Shawnee, or Oklahoma City, please contact me online, give me a call at 405-366-1111 or check out my website.