It’s no secret that it’s a tough market for prospective homebuyers.
In October, US buyers had to earn $107,281 to pay the average monthly $2,682 mortgage on Redfin, a “typical home.” report this week.
That’s 45.6% higher than the $73,668 annual income needed to cover the median mortgage payment 12 months ago, the report shows.
The main reason is rising mortgage rates, said Melissa Cohn, regional vice president of William LaVeyse Mortgage. “The bottom line is that mortgage rates have more than doubled since the beginning of the year,” she said.
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regardless of Plunge reported this weekthe average interest rate for 30-year fixed-rate mortgages under $647,200 hovered below 7%, compared with below 3.50% in early January.
and meanwhile home values softened In some markets, average selling prices are higher than they were a year ago.
“Home prices have risen significantly and mortgage rates have more than doubled, crushing affordability. HSHMore.
Meanwhile, the rising cost of living still puts pressure on American budgets. Annual inflation rate 7.7% in October.
While the current situation may feel tough for buyers, experts say there are ways to reduce your monthly mortgage payments.
for example, higher down payment That means fewer mortgages and lower monthly payments, Gambinger explained. “Going further down in this kind of environment can definitely play a role in keeping mortgage costs down,” he said.
another option It’s a variable rate mortgage, or ARMs that offer lower initial interest rates compared to fixed rate mortgages. The rate is then adjusted to the current market rate at predetermined intervals.
ARM might also be worth considering. understand the riskssaid Cohn.
If you plan to live in the house for several years, you run the risk of not being able to refinance to a fixed rate mortgage before the ARM adjusts. There is a nature.
Your eligibility for future refinancing may change if your income declines or your home decreases in value. “It’s a bigger risk, especially for first-time homebuyers,” Cohn said.
Of course, home values and demand vary by location, which affects affordability, Gambinger says. “Being patient and opportunistic is a good strategy in market conditions like this,” he said.