A Caution to home buyers from CNNMoney:
Rising housing costs are putting a major squeeze on Americans.
Nearly 39 million households can’t afford their housing, according to the annual State of the Nation’s Housing Report from Harvard’s Joint Center for Housing Studies.
Experts generally advise budgeting about 30% of monthly income for rent or mortgage costs. But millions of Americans are far exceeding that guideline.
One-third of households in 2015 were ‘cost burdened,’ meaning they spend 30% or more of their incomes to cover housing costs. Of that group, nearly 19 million are paying more than 50% of their income to cover their housing needs.
When so much of your paycheck is going toward keeping a roof over your head, it forces sacrifices in other budget areas, including food, health care and transportation.
LDSAgents.com note—What this article does not say is that many people finance homes using income generated by both partners working. Not only does this put stress on a family, but if one wage earner suddenly cannot work for some reason, finances can get stretched very quickly. We advise our readers to consider the advice of LDS leaders and be watchful about taking on too much debt.
It takes two to make a marriage work, the saying goes. But sometimes it’s better when only one of them applies for a jumbo mortgage.
There are a number of reasons why one spouse stays off a home loan, says John Walsh, CEO of Milford, Conn.-based Total Mortgage. That person’s high debts, low income or poor credit history could be deal-killers or trigger a higher interest rate.
Getting Mom and Dad to co-sign a jumbo mortgage is a tough sell all around.
The practice is rare, but a few lenders will allow parents to help their adult children qualify for jumbo mortgages, which exceed conforming-loan limits of $417,000 in most places and $625,500 in high-price areas such as San Francisco. A typical scenario: a first-time home buyer whose salary has a strong upward trajectory but who hasn’t been on the job long enough to meet income requirements to buy property in a pricey locale, such as New York, says Ray Rodriguez, regional mortgage sales manager for Cherry Hill, N.J.-based TD Bank, which lends in 15 East Coast states.
Are you a first-time home buyer eager to get into the market? Here are some tips:
1. You may check the selling prices of comparable homes in your area of interest by speaking with your real estate agent. Your agent can give you a general idea of what you should expect to pay and may also direct you to websites where you can do a search of the Multiple Listing Service for homes that meet your criteria. LDSAgents.com has over 3,000 realtors across the USA and Canada who can help.
2. Your real estate agent will be able to recommend reliable lenders to speak to regarding a home loan.
3. There are many variables that can affect your interest rate. Your lender will be your ultimate source in helping you decide what kind of loan is best for you and what you can afford.
4. Know that your house payment may well include items like homeowner’s insurance, mortgage insurance (PMI), property taxes, and homeowners association fees. These costs can vary widely from state to state and location to location.
5. If you obtain a home loan, there will be closing costs associated with it. These upfront costs shouldn’t be overlooked. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowners insurance and homeowners association fees. Again, your lender will be your valuable guide to these matters.
6. Last, but not least, consider a payment plan that enables you to pay off your home as quickly as possible. Paying off a home over 15 years rather than 30 can save you tens of thousands of dollars. One way to do this is to take out a 30 year loan (to guarantee lower monthly payments) and then make additional payments along the way as you are able. Talk to your lender about it.