Katie McBride | Hopkinton Real Estate, Holliston Real Estate, Ashland Real Estate


rocket Zillow recently revealed that the 43 million renter households in the US spent $535 billion on rent in 2015. Aggregate numbers like these often make it difficult to truly assess a situation. For more clarity, we want to share some points that were made in a Wall Street Journal article earlier this month. The article made two important points:

1. Rents are increasing faster than the last several years:

 “Apartment rents increased faster last year than at any time since 2007.”

2. Rent increases are accelerating

“Another report from Axiometrics Inc., a Dallas-based apartment research company, showed that rents increased 4.7% in the fourth quarter compared with the same quarter a year earlier, the strongest year-end performance since 2005”.
Here is a graph to illustrate the rate of increase over the last several years: rent

new-england-home-pricesIn the community of Hopkinton, MA in the past month there have been 16 homes sold.  The average sale price of these homes was $621,706 and the homes were on the market an average of 116 days.  There have been 6 homes listed for sale during the past month Hopkinton, MA.
We are here to serve all your real estate needs in the surrounding communities.  We welcome your business, and we promise to take exceptional care of you or any of your referrals.

blogpost Yesterday, we discussed the belief Americans have in homeownership and their desire to partake in this piece of the American Dream. We also discussed some of the obstacles preventing them from attaining that goal. However, studies have shown that many of the obstacles mentioned are perceived, not real. A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges.

Down Payment

Perceptions

Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:
  • 40% of all renters don’t know what down payment is required
  • 15% think you need at least 20% down
  • An additional 4% think you need at least 10% down

The Reality

There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%.

Credit Score

Perceptions

Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:
  • 54% of all renters don’t know what credit score is required
  • 5% think you need at least a 740 credit score

The Reality

Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.

Back End Debt-to-Income Ratio (DTI)

Perceptions

Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:
  • 59% of all renters don’t know what DTI is acceptable
  • 25% think you need at under 25%
  • 7% think you need under 39%

The Reality

Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.

Bottom Line

A lack of knowledge or misinformation may be keeping some families from buying a home even though they are actually qualified to purchase.

Misc-5In the community of Southborough, MA in the past month there have been 9 homes sold.  The average sale price of these homes was $565,461 and the homes were on the market an average of 123 days.  There have been 6 homes listed for sale during the past month Southborough, MA.
We are here to serve all your real estate needs in the surrounding communities.  We welcome your business, and we promise to take exceptional care of you or any of your referrals.

dream In a recent post, Trulia examined whether homeownership was again being seen by adults in the US as a “part of their personal American Dream.” Over the last five years:
  • The percentage of U.S. adults who believe homeownership is part of their American Dream increased from 70% to 75%
  • The percentage of 18-34 Year-olds who believe homeownership is part of their American Dream increased from 65% to 80%

    Here is a graph of the survey over the last five years:americandream

  • Bottom Line

    As the housing industry recovers from the crisis of 2008-2010, Americans belief in homeownership as part of their own personal American Dream has also made a strong comeback.



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