Just so you know, some people have suggested that rising mortgage rates, less restrictions on lending, and higher property values could lead to another crisis. I really hate to talk about this, but it seems that Americans are still somewhat afraid of entering into a mortgage commitment at this time.
Mortgage application fell for the third week to the lowest in a month, per CNN news. Yes, the interest rates for mortgage have been inching up, and are likely to continue per other reports.
We can certainly agree that housing prices is part of what helped the market to crash back in 2008. However, as you know, when the economy is good, (it is improving every day, it seems), it makes for higher interest rates and the rise of housing.
With many individuals, they have not recovered from that last occurrence of financial issues, and if they are renting, it is hard to take on the full responsibility of owning a home again, especially if they had a foreclosure. However, for some; life goes on and they want a home to call their own.
Housing prices are steadily rising with the interest rates, and that is not totally unpredictable with the economy stated as good. Construction has not continued to rise since the meltdown in 2008. Many builder went down. However, new home do exist.
It is not a bad thing to want a home of your own to build equity. In fact, owning a home is a very nice way to invest your hard earned money which will build equity that you might need later in life when you decide to retire.
Things to consider about sales prices:
- What is the pricing of other homes within the subject immediate area?
- What condition is the home in?
- What amenities are within the subject and the subject’s immediate area?
- What is the Realtor Fee that is added into the Sale Price?
- Could you re-sell this property should you need to without any renovation?
- Can you negotiate a change in sales price?
- Will you get a home inspection so that you are assured there are no hidden facts you do not know or that the seller is not aware of?
You want to make sure you are not over paying for a property. It may sound good that the Realtor fee is added in the sales price, however, is the home really worth the remainder of the asking price. Do you leg work, check out the homes within the immediate subject area and the conditions of the neighborhood.
Here are some consideration to ponder before you jump in:
Please do not take this as discouragement, take it as sound advice. Owning a home is serious business and everything changes per your finances.
- You will possibly have a larger payment than renting. Taxes and insurance, plus mortgage insurance if you are not making a 20% downpayment. This all depends upon the size of your home, the locality, and yes, a lot depends upon your credit. Credit is checked in almost all financial situations. Insurance companies check your credit. Your taxes depend upon your location; city or country, and where you live in the USA. Larger cities have enormous tax bills.
- Your everyday expenses will increase to some extent, one way or the other. This can be your utilities bills, insurance on you home, and even how much you spend on miscellaneous expenses. Depending upon how large your home is, if you use gas or electricity, how conservative you are, and if you can stretch your income.
- When you qualify for a mortgage loan, the utilities are not added into the overall debt to income ratio. Health insurance, life insurance, car insurance etc. are not included either. With that being said, if your utilities rise from what you are paying now, can you afford it?
- Do you have enough of reserves to pay the extra amount of living expenses that will occur regardless in a home?
- Can you discipline your spending to take care of the extras like the home insurance or mortgage insurance that is added into your mortgage payment and your taxes. *these are included in your debt to income ratio, however you still have utilities to pay that may increase and not considered in ratios
Nationwide, the average annual insurance premium is said to be around $1,083. However, some cities are much higher.
- Florida is estimated to be higher at $2,055 annually. *
- Texas is $1947 *
- Oklahoma is $1,772 *
- South Carolina is $1,240
- New York is $1,256
- Nebraska is $1,226
- Louisiana is $1,847 *
- Kansas is $1,431
- Minnesota is $1,219
- Massachusetts is $1,314
- New Jersey is $1,092
- North Carolina is $1, 056
- North Dakota is $1,136
- Road Island is $1,398
- Mississippi is $1,447 *
* States that have the highest insurance premiums **these figures are estimated and are not set in stone as being exact.
*Re: ValuePenguine
With the above said, some people still pay a lot more in premium, depending upon the valuables within the home, the type of coverage etc.
The insurance premiums are based upon the price of the house basically, or what you paid for the home. You must have replacement insurance policy on your home. You want it that way so that you can re-build if needed.
Taxes for your new home:
Your real estate taxes will be determined by your location also as some states have much larger % of real estate taxes. You can check out some of the best and worst for property taxes below.
Taxes is one of largest items that is added into your mortgage payment. There is no way to alter the taxes you must pay on the property you buy. Your real estate tax is figured on how much your property is valued by the county you live in.
Percentage wise some locations get really expensive. As report by The Balance, the worst state for property taxes include:
- Texas: 1.81%
- Michigan: 1.62%
- Rhode Island: 1.35%
- New Jersey: 1.89%
- Nebraska: 1.76%
- New Hampshire: 1.86%
- Vermont: 1.59%
- Connecticut: 1.63%
- Illinois: 1.73%
- Wisconsin: 1.76%
These are some states with a lower percentage:
- South Carolina: 0.50%
- West Virginia: 0.49%
- Louisiana: 0.18%
- Delaware: 0.43%
- Arkansas: 0.52%
- Alabama: 0.33%
- Colorado: 0.60%
**these estimated % is not set in stone and could vary
With all of the above considerations going forward, there is always a lot of concerns that must be addressed by any applicant who wishes to obtain loan financing for a new home.
Good luck and take your time in choosing the right home for you.
