California Affordability Hits 16 Year Low
I spotted this story here first, but it is showing up on several news sites now. (hat tip: Google News)
Your credit score can really hurt you. You may not be able to qualify for a loan large enough to buy your home. Or if your credit score is blemished, you may need to develop a plan to clean it up before you can qualify for a loan. A good loan officer should be able to help you indentify the items on your credit that are hurting you the most. Make a concerted effort to clean up your credit and you will see a marked improvement in your score.
Be aware of the availability of interest-only loans, or loans that offer an interest-only payment option. They will qualify you for a higher loan amount. But they require a high amount of discipline on the borrower's part to pay down the principle balance. Your monthly payment will not include any of your debt, merely the cost of maintaining it. Interest-only loans are great for a lot of situations. Make sure it is the best fit for you before you commit to one.
Are you a first-time home buyer? Many cities, counties and states have special assistance for new buyers. Search online in your region for available programs and particpating lenders. They will be able to tell you if you meet the criteria for the different programs.
Lastly, be prepared to NOT buy, at least for now. You want to own your house, not vice-versa. When you talk to a mortgage broker, if you can't afford what you want now, ask for information on improving your credit. It could make a huge difference in your buying potential.
The minimum household income needed to purchase a median-priced home at $568,890 in California in August was $133,800, based on an average effective mortgage interest rate of 5.87 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $110,980 in August 2004, when the median price of a home was $473,520 and the prevailing interest rate was 5.83 percent.Only 14% of California households are estimated to be able to afford to buy a home. That's a 2% drop from July of this year. With interest rates creeping up, buying a home is trickier. When you go to meet with a loan officer, keep these things in mind:
Your credit score can really hurt you. You may not be able to qualify for a loan large enough to buy your home. Or if your credit score is blemished, you may need to develop a plan to clean it up before you can qualify for a loan. A good loan officer should be able to help you indentify the items on your credit that are hurting you the most. Make a concerted effort to clean up your credit and you will see a marked improvement in your score.
Be aware of the availability of interest-only loans, or loans that offer an interest-only payment option. They will qualify you for a higher loan amount. But they require a high amount of discipline on the borrower's part to pay down the principle balance. Your monthly payment will not include any of your debt, merely the cost of maintaining it. Interest-only loans are great for a lot of situations. Make sure it is the best fit for you before you commit to one.
Are you a first-time home buyer? Many cities, counties and states have special assistance for new buyers. Search online in your region for available programs and particpating lenders. They will be able to tell you if you meet the criteria for the different programs.
Lastly, be prepared to NOT buy, at least for now. You want to own your house, not vice-versa. When you talk to a mortgage broker, if you can't afford what you want now, ask for information on improving your credit. It could make a huge difference in your buying potential.
posted by SecretBarista at 11:44 PM
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