As the nation’s housing market continues to recover from the Great Recession, and more homeowners gain back the equity in their homes lost during the downturn, home ownership continues to be a hard sell for many people, particularly millennials.
While many under the age of 35 have opted to rent, studies suggest that buying might still be the best option for skittish millennials.
As reported recently, a new Fannie Mae study revealed a sizable education gap about lending requirements. Many who plan to buy a home in the next five years believe they can’t get a mortgage but actually do qualify. According to RealtyTrac, buying is still more affordable than leasing in 58 percent of U.S. markets.
In Alabama, buying is more affordable than renting in every major market, according to the survey.
“Rising interest rates definitely decrease buying power. The percentage of a buyer’s monthly income dedicated to their mortgage payment determines what price house that buyer can buy financed through a mortgage. And rising interest rates can create increased mortgage payments. Which means that the amount paid to borrow money is more.
Solution to this problem is if mortgage payments increase and wages remain the same for the buyer, then they must settle for a lower-priced home to stay within budget.
“Buyers should be aware that rising mortgage interest rates reduce the price of the home they can buy,”. So the longer you wait to buy your dream home, you will have to settle for less unfortunately :(
(Source: By ACRE Research)
