Please reload

Recent Posts

Potential Cost of Waiting to Buy a Home

June 12, 2014

1/2
Please reload

Featured Posts

Potential Cost of Waiting to Buy a Home

June 12, 2014

THE POTENTIAL COST OF WAITING TO BUY IN OMAHA, NE.

Affordability declines quickly when rates and prices rise together.

Consider the potential change in payments with a 10% price increase and a 2% increase in interest rates:

 

These hypothetical examples are illustrations for educational purposes only?and are not an offer to lend nor a Good Faith Estimate. Examples are for a $250,000 home that rose to $275,000 with a rate increase from 4.50%/4.762% APR to 6.50%/6.95% APR on a zero point 30-year, fixed-rate loan with a 20% down payment, $4,000 in taxes and annual insurance of?$580 for the "today" example and $638 for the "tomorrow" example. APRs are calculated using closing costs equal to 3% of the loan amount. Actual costs can be less, and actual rates are subject to change at any time. Qualification for any loan is dependent on individual circumstance and subject but not limited to employment/income, credit history and acceptable liquid assets to close.

First time home buyers currently have a historical advantage with both low rates and prices. What happens when the trend begins to shift?

You might not qualify to purchase the same house in Omaha, NE.

Unless your income keeps pace with price and/or rate increases, you may not be able to qualify for the same home you could purchase today. In the example above, the income to qualify increases from $4,038 per month to $5,127 (assuming a debt-to-income ratio of 35%). The 27% increase is much higher than the typical salary increase of about 2% or 3% per year.

In a rising market, you usually can't out-save appreciation  in Omaha, NE.

When prices are rising, it can be difficult for your savings to outpace the market. For example, if a $300,000 home appreciates by 5% in one year, that's $15,000 or $1,250 per month. Can you add that amount to what you're already saving each month?

If interest rates are rising, too, required payments and income increase even more.

Given the recent environment, some may discount the possibility of the 2% increase in the example above, but the 50-year average for a 30-year, fixed-rate conventional loan is approximately 8.375%. That's almost 4% higher than rates at the time of this writing and would equate to a payment increase of more than $663 per month in the example.

Qualified borrowers have the ability to lock in today's prices and rates.  Buyers who have not yet accumulated a large down payment may find that using a small down payment and paying mortgage insurance is wiser than missing out on low prices and historically low rates.

We're here to help when you're ready to learn more about buying  in Omaha, NE.

Tags:

Please reload

Follow Us
Please reload

Search By Tags
Please reload

Archive
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

Copyright © 2013 Bank of England Mortgage. All rights reserved. 
Privacy Policy | Website Analytics Policy | Security | Preventing Identity Theft | USA Patriot Act | Need Credit Counseling? 

  • Facebook App Icon
  • Twitter App Icon
  • Google+ App Icon

Bank of England Mortgage has tried to provide accurate and timely information; however, the content of this site may not be accurate, complete or current and may include technical inaccuracies or typographical errors. From time to time changes may be made to the content of this site without notice. Bank of England Mortgage may change the products, services, and any other information described on this site at any time. The information published on this site is provided as a convenience to visitors and is for informational purposes only. You should verify all information before relying on it and decisions based on information contained in our site are your sole responsibility. If you need specific details about any information contained in our site, you should contact the Bank of England Mortgage at 866.295.9339. If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 866.295.9339  This contact information is for accommodation requests only.

Bank of England Mortgage NMLS 418481. Member FDIC.      

      Equal Housing Lender.