With the current real estate market, trying to find a new home can bring about more challenges than normal. With less inventory and more competition, prices are continuing to rise. For sellers, this market is extremely favorable. But how should buyers proceed? While a strict budget can be helpful, agents and clients have to consider more options to get into the right home. Keep reading to learn how buyers can handle the high prices!
A great place for buyers to start is with the home payment. Buyers should aim to limit the amount they spend on monthly payments. Encourage your clients to spend no more than 25% of their monthly take-home pay on a house payment. This would include principal, interest, property taxes, homeowner’s insurance, and so on. Setting a good budget early on will allow buyers to confidently start their search with a good idea of their financial standing in the long run.
Another important element to consider is the amount buyers should save for a down payment. For most home buyers, 10% to 20% is an ideal size for a down payment. A payment of 20% or more allows buyers to avoid paying a PMI, which is an added fee to the mortgage. Anything less than 10% adds extra interest and fees for the buyers. When possible, buyers should look to save as much as possible for their down payment. In many cases, patience, motivation, and budgeting can allow buyers to realistically meet their savings goals.
Experts suggest that buyers opt for a 15-year fixed-rate conventional mortgage when purchasing a home. These 15-year mortgages are the overall lowest cost home loans available. 30-year mortgages, FHAs, VAs, USDAs, and adjustable-rate ones are considered “rip-offs” mortgage options. These involve significantly more interest rates and extra fees, which can keep buyers in debt for an extremely extended period of time. If they are able, encourage your buyers to go for a 15-year fixed-rate conventional mortgage to save heartache (and money) in the long run.
A great way to see what kind of finances your buyers can afford is by using a mortgage calculator. This will allow them to plan a monthly budget and get them into an affordable home with more ease. High prices can be intimidating, but a solid plan can enforce confidence in both you and your clients!
Upcoming Local Events
Join the city of St. Petersburg at the 2021 Pride Picnic! On Saturday, June 26th in Straub Park, enjoy food trucks, festival vendors, and pride fireworks. The event runs from 2:00 PM to 9:00 PM and is $5 per person for admission.
Learn more about the event at the St. Pete Pride Fest Facebook page!