To determine how much you can spend on a home, take a close look at your budget. Review your bank statements and spending habits for the last couple of months to figure out how much you are spending on everything from cellphone bills to restaurants. The Consumer Financial Protection Bureau offers a spending tracker that can help you figure out where your money is going each month.
Once you have a better picture of your spending habits, determine how much you want to allocate toward a monthly home payment. This figure includes your principal, interest, tax and insurance payment, which add up to your monthly mortgage sum.
The Federal Housing Administration formula, used by many lenders, recommends allocating no more than 31 percent of your monthly income to your housing payment. This figure will change based on your amount of debt. Buyers with noother debt may be able to budget as much as 40 percent of monthly income to housing. (But remember that the rest of your budget is going to have to go toward heat, water, electricity, routine home maintenance and food.) Overall, your total debt-to-income ratio, including car payments and credit card bills, should not exceed 43 percent.
So, for example, if you make $50,000 in annual gross income, your monthly gross income is $4,167. That should leave you with $1,292, or 31 percent to devote to your monthly mortgage, provided your overall debt does not exceed $1,792 a month. Our mortgage calculator can help you determine what your monthly mortgage may be.
But remember that besides the mortgage, buying a home includes additional one-time payments that can quickly add up, including closing costs, legal fees and other expenses associated with buying, such as a house inspection. And don’t forget about moving fees or home improvements. By Michelle Higgins NY Times
Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report.
The report announced that the median existing-home price in June was
$236,400. That value surpasses the peak median sales price set in July
2006 ($230,400). This revelation created many headlines exclaiming that
home prices had hit a “new record”:
Wall Street Journal: Existing-Home Prices Hit Record
USA Today: Existing home sales surge, prices hit record
Though the headlines are accurate, we want to take a closer look
at the story. We do not want people to believe that this information is
evidence that a new “price bubble” is forming in housing.
NAR
reports the median home price. That means that 50% of the homes sold
above that number and 50% sold below that number. With fewer distressed
properties (lower valued) now selling, the median price will rise. The
median value does not reflect that each individual property is
increasing in value.
Below are the comments from Bill McBride, the author of the esteemed economic blog Calculated Risk.
McBride talks about the challenges with using the median price and also
explains that in “real” prices (taking into consideration inflation) we
are nowhere close to a record.
“In
general I'd ignore the median sales price because it is impacted by the
mix of homes sold (more useful are the repeat sales indexes like
Case-Shiller or CoreLogic). NAR reported the median sales price was
$236,400 in June, above the median peak of $230,400 in July 2006. That
is 9 years ago, so in real terms, median prices are close to 20% below
the previous peak. Not close.”
Earlier this week, the Wall Street Journalcovered this issue in detail. In this story, Nick Timiraos explained that this rise in median prices is nothing to be concerned about:
“Does
this mean we have another problem on our hands? Not really…There may be
other reasons to worry about housing affordability by comparing prices
with incomes or prices with rents for a given market. But crude
comparisons of nominal home prices with their 2006 and 2007 levels
shouldn’t be used to make cavalier claims about a new bubble.”
Bottom Line
Home
values are appreciating. However, they are not increasing at a rate
that we should have fears of a new housing bubble around the corner.
Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report.
The report announced that the median existing-home price in June was
$236,400. That value surpasses the peak median sales price set in July
2006 ($230,400). This revelation created many headlines exclaiming that
home prices had hit a “new record”:
Wall Street Journal: Existing-Home Prices Hit Record
USA Today: Existing home sales surge, prices hit record
Though the headlines are accurate, we want to take a closer look at the
story. We do not want people to believe that this information is
evidence that a new “price bubble” is forming in housing.
NAR reports the median home price. That means that 50% of the homes sold
above that number and 50% sold below that number. With fewer distressed
properties (lower valued) now selling, the median price will rise. The
median value does not reflect that each individual property is
increasing in value.
Below are the comments from Bill McBride, the author of the esteemed economic blog Calculated Risk.
McBride talks about the challenges with using the median price and also
explains that in “real” prices (taking into consideration inflation) we
are nowhere close to a record.
“In general I'd ignore the median sales price because it
is impacted by the mix of homes sold (more useful are the repeat sales
indexes like Case-Shiller or CoreLogic). NAR reported the median sales
price was $236,400 in June, above the median peak of $230,400 in July
2006. That is 9 years ago, so in real terms, median prices are close to
20% below the previous peak. Not close.”
Earlier this week, the Wall Street Journalcovered this issue in detail. In this story, Nick Timiraos explained that this rise in median prices is nothing to be concerned about:
“Does this mean we have another problem on our hands?
Not really…There may be other reasons to worry about housing
affordability by comparing prices with incomes or prices with rents for a
given market. But crude comparisons of nominal home prices with their
2006 and 2007 levels shouldn’t be used to make cavalier claims about a
new bubble.”
Bottom Line
Home values are appreciating. However, they are not increasing at a rate
that we should have fears of a new housing bubble around the corner.
- See more at:
http://theocrealestateedge.com/2015/07/are-home-values-really-at-record-levels/#sthash.lk2QBKzD.dpuf
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S 160th LN Goodyear, AZ 85338 $79,000
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The National Association of Realtors said Monday its seasonally adjusted index of sales agreements rose 6.1 percent from August to 110.1. It was the highest reading since December 2006 and more than 21 percent above a year ago.
Phoenix, Arizona is one of the lowest priced housing markets in the West, with exceptional real estate investment opportunities.
But..... How bout that FHA BUYER!!! or shall we call them discouraged qualified buyers.
Not only are we seeing 7-10 offers on every decent low priced REO property, but of those offers about 50% of them are all cash. This has become a problem for the First time FHA buyer, who are constantly losing out to these cash bids.
Trying to sell lender owned homes to FHA buyers can be very frustrating, very time consuming and an extremely long process. Most of the REO listing in the MLS will say they accept FHA financing but when they have other offers for either Cash or Conventional terms it seem like the FHA offer is on the bottom of the pile.
Hopefully as banks release more of their foreclosed properties and the competition lessens as we approach the holidays, sellers will again start looking at FHA buyers. It's a shame that so many will miss out on the $8000 tax credit, lets hope for an extension there.
Last week, the National Association of Realtors (NAR) released their 