It’s Time! It’s your time to buy a house! If you have been thinking about making the move from renting to buying, this just might be the perfect time to become a homeowner! In fact, Palm State Mortgage thinks it might be the best time you will see for mortgage deals in the next few years. No this is not going to be yet another “Interest Is Low” article, although that is part of the story. In fact, that is the opinion of Matthew Graham, Chief Operating Officer of the Mortgage News Daily.
Time For Buying Your Home and Why!
At the close of last week, Graham stated, “Mortgage rates are experiencing increased volatility, which was to-be-expected given the calendar of events and economic data. Fortunately, the volatility worked in favor of lower rates this morning after Retail Sales and a key consumer inflation report both came in lower than expected.”
But this story is about something different than low interest–something you might not have heard much about.
It seems that 2017 continues to surprise everyone with many glimmers of optimism shining for the future of home ownership.
Since last month was home ownership month, President Trump stated, “During National Home ownership Month, we recognize the many benefits of home ownership to our families, our communities, and our Nation. For generations of Americans, owning a home has been an essential element in achieving the American Dream.”
He added, “Home ownership is often the foundation of security and prosperity for families and communities and an enduring symbol of American freedom. This month, we recommit to ensuring that hard-working Americans enjoy a fair chance at becoming homeowners.”
Take Time To Check Out The Affordability Factor!
Have you ever heard of the “affordability factor?” One of the many reasons Palm State Mortgage thinks it might be time for you to seriously consider buying a home is the affordability factor.
This little known, far-under-estimated but powerful factor is comprised of 3 parts.
By the way, the recent quarter of 2017 marks the 38th quarter in a 9-year range of time during which the Affordability Index was 50 or above.
Moreover, 50 is the tipping point at which housing in a quarter of a year will qualify as “affordable.” Looking at this last quarter, how do we get the score? Check out the protocol explained below. Then we will tell you the unexpected score for housing affordability during the last quarter of 2017.
Time for Homework: Learn the Three Components to Affordability
Here are the 3 factors experts use to rate homes as “affordable.” When the National Association of Home Builders wants to assess the affordability of a home, they assemble 3 major pieces of information.
- What is the “Median home price nationwide?”
- What is are the rates for the Average 30-year fixed mortgage?
- What is the average monthly income of an average household?
Time to Put All Three Factors Together!
With a few calculations, they decide “An “affordable” home is one for which the front-end debt-to-income ratio is 28% or less of the area’s median household monthly income.” Thus, they calculate front-end debt-to-income ratio by a simple formula:
The front-end debt-to-income ratio is simply the total housing payment divided by the total monthly income.
If you need to better understand debt-to-income ration, check out a previous Palm State article. You will like what you read!
Likewise, be aware that this Affordability Index makes two assumptions:
1. Your home mortgage is financed according to conventional financing.
2. You can make a 10 percent down payment. Then, it’s time to become a Florida homeowner. Check out the affordability factors!
Affordability and Some Surprising Conclusions!
Today’s homes rank at an index number of 60!
The experts tell us, “Affordability remains at a healthy level, almost exactly matching the average affordability “score” since 1991.”
Moreover, the NAHB states that, figured this way, “homes are much more affordable than in 2007, when home prices were equally as high: the Home Opportunity Index rang in at a discouraging 43.1% that year.”
So, in conclusion of Part One of our Time to Buy a House series of blog articles, if you are serious about a home by the end of 2017 or 2018, Palm State wants to help you buy now.
Our lenders’ low-interest rates and the nice affordability index won’t–and can’t–last forever!
Thank you for reading the Palm State Mortgage Company Blog, and we genuinely hope you return next week for part 2 of this exciting information on the affordability of the home in your near future.