Category: Real Estate

Mortgage Rates Are Trending Up – Should You Worry?

Unless you plan to buy your home with cash (lucky you!), it’s important to know what’s going on with mortgage rates these days. The bad news is that they are rising. The good news is that they have been at historic lows since the housing market crashed nearly 10 years ago — and they are still low. But since they probably won’t stay this way forever, let’s take a moment to learn what rate hikes could mean to you.

Should you hurry to buy a home?

When rates start to rise, homebuyers often rush to buy a house — in theory, these buyers are hoping to get into a new home before rates go any higher. But Ralph McLaughlin, Trulia’s Chief Economist, advises against this. “Don’t rush,” he says. “Buying the wrong home can be a costly mistake to fix. Mortgage rates are just one of many factors that go into the decision to buy a home — and it certainly shouldn’t be a deal breaker,” says McLaughlin.

How does an increased rate affect loan payments?

would have to hit 9.1% before renting becomes cheaper than buying a home in most major markets,” says McLaughlin. “Even in the most expensive markets, rates would need to be over 5% to tip the scale on the rent versus buy math.” If you think you might move in five years, there are ways to get a lower interest rate (if you qualify). You could take on a five-year adjustable-rate mortgage, which could get you a lower interest rate — plus rate increases at years four and five.

What about the price of a home?

There’s good news for some homebuyers when interest rates increase. Yes, you read that right. Increased rates often mean a decrease in the number of potential buyers — and that can bring down home prices. For instance, even if you have to pay $100 more per month because of a rate increase, things could still balance out — or you could even come out ahead — if you get the home for less.

The Early Bird’s Guide to Buying a Home | realtor.com®

Planning to buy a home this spring? Then right now—yes, during these last days of winter—is the time to get rolling.

“Spring is peak home-buying season, which means you’re going to have a ton of competition from other buyers,” says Peggy Yee, supervising broker at Frankly Realtors in Vienna, VA. Hence, winter is the ideal time to get ahead of the curve, but how? Follow these steps and you’ll be way ahead of the pack once the spring home-buying season heats up.

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Step No. 1: Find a buyer’s agent

Teaming up with a buyer’s agent during the winter offers several advantages. For starters, because business is slow, an agent can take the time to help you identify what type of home you want and educate you on the local market so that you’ll have realistic expectations of what you’ll be able to find in a few months.

Also, “your agent may hear of properties that are going to come on the market in the spring, which could enable you to get a sneak peek at homes before other buyers,” Yee says.

To find a real estate agent, you can ask friends or family for referrals, or use a reputable real estate agent database.

“If you’re laser-focused on a specific neighborhood, you’ll want to work with a neighborhood specialist—someone who knows the community like the back of their hand,” Yee advises.

Step No. 2: Get your financing squared away

Before you even lay eyes on a house, you should be looking at lenders. Why? Because lenders will help you get real about how much house you can afford. They will determine how much money they’re willing to lend you by checking out your financial details, from your income to your credit score and more. Plus, if your finances are less than perfect, you’ll be able to find out in plenty of time to make amends.

“Depending on what shape your credit is in, it may take a couple of months to raise your score,” says Richard Redmond, mortgage broker at All California Mortgage in Larkspur and author of “Mortgages: The Insider’s Guide.”

There’s no magic spell to banish poor credit; the strategy will depend on your financial situation.

“For some people, it might make sense to pay off their credit card balances over the next couple of months, but that might not be the right move if you’re going to need the money for closing costs,” Redmond explains. Thus, it’s beneficial to get credit advice from a mortgage professional at least two to three months before you plan to buy.

If your credit score is strong (760 and above will qualify you for the best interest rates), getting pre-approved for a home loan now makes sense.

“Pre-approval is usually only good for 90 days,” says Redmond, “but it’s easy to renew it if the borrower’s financial picture doesn’t change. And when interest rates are trending upward, which they currently are, it’s better to lock in your rate sooner rather than later.”

Step No. 3: Start previewing homes

You’ll probably do an initial consultation with your agent to identify what type of home you want to buy. However, you won’t really know what type of home you’re looking for until you actually step inside some homes, says Lisa Cahill, co-owner of Evolve Real Estate in St. Petersburg, FL.

“Your criteria can change when you start to look at properties,” says Cahill. For example, you might think you need a home with 2,500 square feet of living space, but that number could change when you start seeing homes in person. Your real estate agent can alert you to open houses to attend during the winter months.

Step No. 4: Scrutinize prospective neighborhoods

Have your sights set on a particular neighborhood? Winter is a good time to see whether the community is going to be a good fit.

“You can tell whether an area has good schools on paper, but there are a lot of things you can’t judge unless you go there in person,” says Cahill.

For instance, online research won’t show you what the noise level is during rush hour or what the neighbors are like (e.g., is it more for young families or older residents?). Those are things that you need to assess with your own eyes. Concerned about traffic? “Go and test-drive your commute,” says Yee.

Step No. 5: Don’t rule out buying early

Even if you had originally planned to buy later in the spring, what if you find a home you absolutely love earlier? If you’re willing and able to move earlier, then keep an open mind with respect to buying a home during the winter. Granted, there are fewer homes to choose from, but there’s also less competition.

“You’re less likely to encounter a multiple offer situation,” says Yee. Translation: Don’t hesitate to make an offer in February or March if you find the perfect house.

Planning to sell the home you’re currently in this spring as well? Tune in tomorrow for the early bird’s guide to selling your home.

How Millennials Are Buying Houses With Less Than 5% Down | Fox Business

A down payment of 20% has been, and continues to be, the industry standard for a new mortgage. However, it’s important to realize that there is a big difference between an industry standard and a set-in-stone requirement. In fact, since the housing and credit markets have improved dramatically since the Great Recession, there are several ways you can buy a house with less than 5% down.

The 3% down conventional mortgage

After a period of tight credit following the financial crisis, government-sponsored enterprises Fannie Mae and Freddie Mac began to bring back low down-payment conventional mortgages. Since 2014, conventional, fixed-rate mortgages have been available with as little as 3% down.

Image source: Getty Images.

It’s important to point out that Fannie and Freddie don’t originate mortgages, they buy mortgages originated by banks that meet their lending standards. To get a 3% down conventional mortgage, you’ll need to find a lender Opens a New Window. that offers them. Fortunately, most of the major U.S. mortgage lenders do — often under their own brand names, such as Wells Fargo‘s yourFirstMortgage loan.

To qualify for a 3% down conventional mortgage, the current guidelines require a minimum FICO credit score of 620, along with your income, employment record, and your assets. As a senior Fannie Mae official confirmed shortly after these mortgages began to be offered, a buyer with a 620 credit score is unlikely to qualify, unless he or she has a stellar income, lots of money in reserves, or some other offsetting factor. In addition, the loan amount cannot exceed Fannie Mae and Freddie Mac’s “conforming” maximum — $424,100 for most locations in 2017.

The majority of people who get approved for a conventional mortgage have credit scores in the 700s or better. Many lenders have minimum standards that exceed those set by Fannie and Freddie. The only way to know for sure if you’ll qualify for a 3% down conventional mortgage is to talk to a lender Opens a New Window. (or several), and complete the pre-approval process Opens a New Window. , which is a good thing to do before you start shopping for a home.

Finally, be aware that if you get a 3% down conventional mortgage, you’ll be required to pay private mortgage insurance (PMI), at least until your loan-to-value is paid down to 80%.

Even if your credit isn’t great, the 3.5% down FHA mortgage may be an option

As I mentioned, the minimum FICO credit score required for a conventional mortgage is 620, as of this writing. A credit score above that threshold is no guarantee of approval.

Fortunately, the FHA mortgage may be a good option for buyers who can’t qualify for a conventional loan. Many lenders Opens a New Window. that originate conventional loans also offer FHA loans, and that option is worth considering if your qualifications aren’t quite up to par for a conventional mortgage. The down payment requirement of 3.5% is slightly higher, but it can also come from other funding sources, such as a gift.

If you’re looking to put 3.5% down, you can get an FHA mortgage with a credit score as low as 580. And while FHA loans also consider other factor, such as your income, employment, and assets, it tends to be easier to get a FHA loan, especially if your credit is just above the minimum requirement.

In addition, FHA loans can be made on one- to four-unit properties, whereas the 3% conventional mortgage is only available on single-unit, owner-occupied homes. In other words, you could use an FHA loan to buy a duplex, live in one side, and rent out the other to help cover the mortgage. Just like conventional mortgages, FHA loans cannot exceed the limits set for the home’s location. As of 2017, the FHA loan limits range from $275,665 to $636,150.

The downside to an FHA loan is the cost. It’s true that the FHA mortgage insurance rate of 0.85% of your loan balance (on a 30-year loan with the minimum down payment) is competitive with the private sector, but unlike conventional loans, you won’t be able to simply cancel the FHA mortgage insurance after paying some of the loan down — it will remain for the life of the loan. Furthermore, you’ll pay an upfront mortgage insurance premium as well, currently equal to 1.75% of the loan amount. This can be rather expensive — on a $250,000 mortgage, this is a $4,375 added expense.

Zero down for veterans and rural homebuyers

Another way to buy a home with less than 5% down applies to veterans and certain homebuyers in rural areas — buyers who qualify don’t have to put any money down.

VA loans are available to veterans and active-duty military personnel. Not only do these loans require no down payment, but they typically have a slightly lower interest rate Opens a New Window. than buyers could get on the open market, and they have no mortgage insurance requirement. Here’s Opens a New Window. a full list of requirements from the Departments of Veterans Affairs that can help you determine if you qualify.

USDA loans are available to buyers in certain rural areas whose income is under the limitations for their home’s location. They require no down payment, but there is a “guarantee fee” that must be paid upfront and annually, similarly to FHA mortgage insurance. You can find out whether a home might qualify for a USDA loan here Opens a New Window. .

Check with your bank or credit union

As a final thought, many lenders and credit unions have their own lending programs designed to make homeownership more accessible to otherwise qualified buyers who don’t have a lot of cash to put down. For example, Regions Financial offers 100% financing to buyers with excellent credit through its “Affordable 100” program. These loans don’t require mortgage insurance, but buyers can expect a higher-than-average interest rate to compensate the bank for taking on the added risk.

In addition to the other options I’ve discussed, it’s a good idea to check with some banks (national, regional, and local) and credit unions to see if they have any unique loan programs that might be a good fit for you.

The Big Down Payment Myth | Realtor Magazine

Having the spare capital to put 20 percent down on a home purchase is great, but it’s certainly not the norm. Still, many people think it is and that belief may be holding some would-be home buyers back, particularly young adults.

Indeed, 39 percent of non-owners say they believe they need more than 20 percent for a down payment on a home purchase. Twenty-six percent believe they need to put down 15 to 20 percent, and 22 percent say they need a down payment of 10 percent to 14 percent to buy, according to the National Association of REALTORS®’ 2017 Aspiring Home Buyers Profile report. 

But now for the reality: The average down payment on a purchase mortgage was just 11 percent in 2016. And that’s just the average; often times down payments are much lower. For borrowers under the age of 35, the average down payment was just under 8 percent, according to NAR’s survey.

As such, “aspiring first-time buyers think it takes twice as much to buy a home than it really does,” writes Jonathan Smoke, realtor.com®’s chief economist, in his latest column.

How much a person truly needs for a down payment depends on their situation. Their financial circumstances, home location, and the price of the home are important factors.

But there are many mortgage options that offer the opportunity to make low or even no down payments. For example, the Department of Veterans Affairs and the U.S. Department of Agriculture offer no-money down loans to those who are eligible. In 2016, 16 percent of buyers under the age of 35 put no money down on their home purchase.

Further, the largest share of loans for buyers under age 35 last year were for people putting down less than 5 percent on a home purchase (or about $3,500). The 3 percent down payment programs backed by Fannie Mae and Freddie Mac, and the 3.5 percent FHA mortgage that primarily targets first-time buyers, are both helpful programs to consider. These loan programs don’t require unblemished credit either. The average FICO score was 713, but realtor.com® notes borrowers with a 639 were still getting approved.

As such, Smoke says the millennial dreaming about homeownership needs to get this message: They need a FICO score of at least 639 and enough for a 5 percent down payment (that is, if they don’t qualify for the other programs with lower payment options). In that case, they’ll need to save about $3,500 to buy in the typical American town.

What Is a Bridge Loan? A Way to Buy a Home Before Selling One | realtor.com®

Home loans come in all shapes and sizes to suit the needs of home buyers, and one type that’s definitely worth knowing if you’re trying to buy and sell a home at the same time is a bridge loan. So what is a bridge loan? As the name suggests, it’s a “bridge” that allows you to purchase new property by using the home you currently own as collateral.

Also called a “wrap” or “gap financing,” bridge loans are a lifeline for home owners who are eager to purchase new digs before they’ve sold the home they’re currently in. In such scenarios, unless you’ve got wads of cash, it can be hard to qualify for a loan on that new home while you are still saddled with the mortgage on your first—for many people, that means stretching their finances awfully thin.

While some lenders may be reluctant to grant you a new loan for that second home, they also know that the odds are good that you’ll sell your first home soon enough—and then be flush. So, a bridge loan helps span that gap.

 

How bridge loans work

Typically, for a bridge loan, you can finance up to 80% of the combined value of both homes. So, if you’re selling a home for $200,000 and buying another one for $300,000, you can borrow $400,000, max. As for the rest (in this case, $100,000), you’ll need that handy either in home equity, savings for a down payment, or some combination of the two. Once your home sells, you pay off the bridge loan and then apply for a new mortgage to finance just your new home.

Bridge loans typically take a shorter time to process than conventional loans (a couple of weeks versus a few months) and are meant to last only a short time (often three months to a year). However, since lenders can’t make much money in interest in such a short time, they typically charge higher rates and fees than they would on a standard home loan. In the current market, bridge loan interest rates can range from 6% to 16%, says Jordan Roth, vice president of GuardHill Financial Corp. in New York, NY.

With interest rates like that, the idea is to pay the bridge loan off as quickly as possible, as soon as you sell your previous home (that said, some lenders have a prepayment penalty, and others don’t, so do make sure to read the fine print).

Bridge loans also come with substantial origination fees—consider it the price you pay for the convenience and short term of the debt.

Pros and cons of bridge loans

The advantage of a bridge loan is that you can make an offer on a new home without a financing contingency, which means that you’ll only buy the home if you can secure a mortgage. Odds are, the personal selling the home you hope to buy doesn’t like financing contingencies, since that would mean that your offer is not a sure thing. A bridge loan solves this problem by guaranteeing the cash needed to close the deal.

Still, bridge loans are rare—requiring an excellent credit score and a low debt-to-income ratio—and do come with substantial risks. Even if you’re pretty sure you’ll sell your home quickly and can pay off this high-interest loan, the real estate market is never a sure thing, and there’s always a possibility that your existing home will take far longer to sell than you imagine … or, God forbid, never sell at all. Then, you’re stuck paying high rates and, if you can’t pay up once the loan comes to term, you could end up losing your home to foreclosure. Granted, most lenders are willing to extend the deadline on a bridge loan, but not forever.

Is a bridge loan right for you?

Whether you should get a bridge loan or not “depends on the market you’re in,” says Steve Goldman, a real estate partner with Kurzman Eisenberg, Corbin & Lever LLP in White Plains, NY. As a general rule of thumb, it’s a good gamble if your home is situated in a hot seller’s market, where you are reasonably assured that it will sell in a short time. “If you’re in a seller’s market, it’s generally fine to buy a new house, then sell your old one,” says Goldman.

However, if you’re in a buyer’s market, where your home might sit on the market for months or years, it’s much wiser to sell your house and rent something for a short time until you find another home you love. Yes, that means you’ll have to move twice—once into your rental, then again, once you buy a home—but that hassle will pale in comparison to the stress you’ll face when the clock is ticking on a bridge loan. So make sure you’re a good candidate before you go out on this limb.

These Mortgage Tips Should Be Etched In Stone — The Motley Fool

If you’ve been thinking of buying a home, this might be a good year in which to do it. Interest rates have begun rising, and some experts are predicting that home prices will rise this year, too. Don’t approach the homebuying process in a haphazard way, though. Be a savvy, informed buyer, and you may be able to save thousands of dollars, and perhaps afford a better home, too.

Here are some critical mortgage tips you need to know as you start thinking about, and looking at, places that might become your next home.

A high credit score will get you low interest rates

Many people underestimate just how much influence their credit scores have on the interest rates that lenders offer them. If your credit score isn’t as high as it could be, consider spending some time beefing it up before starting to buy a home. You might do so by fixing errors in your credit record, paying bills on time, and reducing your overall debt load.

To understand the kind of difference your credit score makes in the interest rates you’re offered, consider sample rates listed at MyFICO.com. When I checked it recently, it showed that, if you were borrowing $200,000 via a 30-year fixed-rate mortgage and you had a top FICO score in the 760 to 850 range, you might get an interest rate of 3.9%, with a monthly payment of $941 and total interest paid over the 30 years of $138,735. If your score was 630, though, your rate would be 5.5%, with a monthly payment of $1,132 and total interest of $207,364. That’s $191 more per month — $2,292 per year — and a whopping $68,629 more in interest. 

 

Shopping around for a mortgage can yield a better deal

If you’re offered a decent mortgage rate from a lender, don’t stop there. Different lenders use different calculations when they assess you and quote interest rates. It’s true that your own bank(s) may give you a bit of a discount because you’re a customer. But check with other banks, too — and with credit unions, which often sport lower interest rates.

You might also consult a mortgage broker, as a good one can access rates from a wide range of lenders and can be especially helpful if you have an underwhelming credit record. Visit Bankrate.com, too, where you can look up the best rates in your area and beyond.

 

Don’t buy more home than you can afford

If you start looking at homes that cost around $300,000, it’s not uncommon to find yourself suddenly considering ones that cost $325,000 or $350,000. It’s tempting to look a bit beyond your price range, as you’ll see homes that are bigger, or just better in some ways. Resist that temptation, though. If you spend more than what you can really afford, you’ll be stretched thin financially.

Some suggest spending no more than 25% to 30% of your gross monthly income on housing (including property taxes and insurance), but instead of relying on that broad guideline, take the time to figure out just what you can afford. For many people, it’s smarter and safer to spend no more than 20% on housing.

Take into consideration your regular household expenses, such as food, utilities, transportation, insurance, travel, entertainment, auto maintenance, debt payments, contributions to savings accounts, and so on — and factor in other expenses, too, such as medical or automotive emergencies and the cost of prepping your old home for sale and setting up your new one. Buying less home than you can afford will give you a margin of safety and help you meet other financial goals, such as saving for retirement or college. 

 

Aim to pay at least 20% down

One way to buy a bigger home than you can afford is by making a small down payment. It’s generally not a good idea, though. Putting less than 20% down on a new home means you’ll have to take on an extra loan in the form of private mortgage insurance (PMI), which will increase your monthly payment.

A low down payment might also result in a higher interest rate. It’s particularly bad if home values drop during your ownership period, leaving you with an “underwater” mortgage, where you owe more than the home is worth. That can make it hard to sell the home if you need or want to.

 

Get pre-approved for a mortgage, once you’re ready

Once you know what loan you want and from which lender, don’t wait until you find the home of your dreams to start the paperwork. Get pre-approved for the loan before you go shopping. This has several advantages.

First, through the process of working with a loan officer, you can determine just how much home you can afford to buy. Second, it will make you a more credible buyer should you end up bidding against any other buyers for a home. Pre-approval means that the lender will have looked at your credit score, your employment, your financial health, and perhaps some tax returns — and found you creditworthy.

 

Choose the kind of mortgage that will serve you best

Finally, remember that mortgages come in a variety of shapes and sizes. Don’t assume that a standard 30-year fixed-rate mortgage will serve you best. It might, but consider alternatives.

For example, you need to decide between a 15-year or 30-year loan — other time frames are also available — and between a fixed-rate mortgage or adjustable-rate mortgage (ARM). Longer terms will give you lower payments, but you’ll pay much more in interest over the life of the loan.

Consider this example from a Bankrate.com calculator. If you took out a $200,000 mortgage at the recent national average interest rates of 4.27% for a 30-year fixed-rate loan and 3.49% for a 15-year fixed-rate loan, you’d pay a total of $57,181 in interest over the life of the 15-year loan and $155,040 over the life of the 30-year loan. That’s almost $100,000 more!

If you’re not comfortable with a 15-year mortgage’s steeper payments, consider getting a 30-year loan that permits prepayments — then aim to pay significantly more than you need to each month in order to shorten the life of the loan. If you’re not planning to be in the home long, an ARM could serve you better in today’s low-interest rate environment, as it can lock in ultra-low rates for a few years. If you think you’ll be in the home for decades, though, it can be better to lock in a low rate for the expected long life of the loan — especially because interest rates have started inching up.

Keep these mortgage tips in mind as you prepare to hunt for and buy a new home. They may save you many thousands of dollars.

 

Mortgage rate increase could be imminent: Lock in a low rate today
The days of saving with a rock-bottom mortgage rate may be numbered. In fact, mortgage rates recently spiked from multi-decade lows and President Trump is already taking actions that could increase your mortgage costs further. There may be no better time than now to lock in a low rate for a refinance or new home purchase. Uncover how much you could save by comparing current mortgage rates and calculating your monthly mortgage payment.

 

Do a Foundation Check: 5 Things to Watch For

Take a closer look at the home’s foundation before buying

An undisclosed structural foundation repair could leave a new buyer facing a price tag of $20,000 or more.

“We’ve seen foundations sink 8 inches,” says Stock. “That was a $150,000 repair for the homeowner.”

Stock offers the following tips on how to detect foundation issues on your own and when to call in an inspector for further investigation:

1. Does it smell like mold or mildew? A foundation leak could be the cause.

2. Look for cracks in outside foundation outside and cracks in brickwork. Do you notice a leaning or tilting chimney?

3. Investigate the driveway and garage door too as well as the concrete patios looking for cracks as well.

4. In the basement, are there signs of water damage (e.g. peeling paint; chalky deposits left after water dries)?

5. Do doors or windows stick when opening/shutting? That is a tell tale sign of foundation damage.

If you suspect any issues, be sure to have a licensed home inspector do a thorough inspection of the foundation.

What Is a Home Warranty? Pros, Cons, Costs | realtor.com®

Lots of things you buy come with a warranty in case they break down, from cars to smartphones. But what about homes? It turns out you can get a home warranty, too.

So what the heck is a home warranty, anyway? In a nutshell, it’s a policy you pay for that covers the cost of repairing many of your home appliances if they break down.

“Home warranties provide financial protection for homeowners who might be faced with unexpected problems with their appliances,” explains Shawna Bell of Landmark Home Warranty.

Many people buy a home warranty right when they close on a home, since such protections can provide some much-needed peace of mind that you won’t get hit with unexpected expenses soon after moving in. Imagine what a bummer it would be, after all, to wake up one morning to a broken boiler or leaking, malfunctioning fridge in your brand-new home. A home warranty can lessen those worries, which for many is worth every penny.

What does a home warranty cover?

Don’t mistake a home warranty for homeowners insurance, which covers your home’s structure and belongings in the event of a fire, storm, flood, or other accident. A home warranty, in comparison, will cover repairs and replacements on systems and appliances due to normal wear and tear—no calamities required.

 

Home Prices Are Soaring to New Highs | Realtor Magazine

Home price appreciation picked up speed in the final three months of 2016, prompting the majority of metro areas to soar to new record highs with home prices, the National Association of REALTORS®’ latest quarterly report reveals. Of the 150 markets NAR has tracked since 2005, 52 percent – or 78 – now have a median sales price that is at or above its previous all-time high.

The fourth quarter of 2016 proved to be a strong one for home price appreciation. The median existing single-family home price rose in 89 percent of the measured markets. Thirty-one metro areas out of 178 saw double-digit gains.

“Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 percent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” says Lawrence Yun, NAR’s chief economist. “At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

In the fourth quarter, the national median existing single-family home price was $235,000 – up 5.7 percent from the fourth quarter of 2015 ($222,3000).

Inventories of homes for-sale remain tight. At the end of the fourth quarter, 1.65 million existing homes were available for sale, which is 6.3 percent below year ago levels and the lowest level since NAR began tracking the supply of all housing types in 1999.

“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets,” Yun says. “The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

Nationwide, a boost in home prices and mortgage rates at the end of the year slightly weakened affordability compared to a year ago. That came despite a solid uptick in the national family median income.

To buy a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $51,017; they would need an income of $48,332 for a 10 percent down payment; and they would need an income of $42,962 for a 20 percent down payment, according to NAR.

“Even a pick-up in wage growth may be insufficient to compensate the impact of higher mortgage rates and home prices,” Yun says. “Increased homebuilding will be crucial to alleviate supply shortages and stave off the affordability hit.”

Consumers More Optimistic About Housing | Realtor Magazine

More Americans are showing optimism toward their personal finances and the housing market, a reversal to a five-month decline.

Read more: Optimism Grows Among Sellers, Buyers

In particular, Americans are more upbeat about home prices, home selling, their rising household incomes, and they’re less scared about losing their jobs, according to Fannie Mae’s Home Purchase Sentiment Index, a survey of 1,000 Americans in January about their attitudes toward housing.

“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability. If consumers’ anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more.”

Here’s a closer look at some of the findings from the latest survey:

• 42% of Americans believe home prices will increase, a month-over-month uptick of 7 percentage points in January.
• 69% of Americans say they are not concerned about losing their job, a 1 percentage point increase from December 2016.
• 15% of Americans say now is a good time to sell, a 2 percentage point month-over-month increase.
• 15% of Americans who say their household income is significantly higher than it was 12 months ago, a month-over-month increase of 5 percentage points.
• 29% of Americans who say now is a good time to buy a home, a 3 percentage drop from December 2016 and a new survey low from May and September 2016.