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Numbers Count: Weekly mortgage data highlights

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Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.

The numbers: What millennials want

Young African American couple looking at architect plans while lying on a wooden floor.Millennials tend to buy smaller, older, and less expensive homes compared to what older generations buy, according the National Association of Home Builders analysis released Dec. 1 of the government’s 2013 American Housing Survey (AHS). According to the AHS, one out of three households who moved and bought a home in the previous two years were millennials. Three out of four millennials who purchased a home were first-time buyers, and “financial considerations” (e.g., sales price, financing) top the list of reasons given by millennials for choosing a particular home (rather than factors like design, neighborhood, etc.). Three out of four millennials picked a particular home for financial reasons, compared to 64% among older buyers.

What counts: The fact that 75% of millennials cite financial reasons for choosing a particular home is a pleasant reminder of the importance of living within our means. When you are house hunting — especially for a first home — it’s important to prioritize what you need and what you want in a home. The federal Department of Housing and Urban Development has a house hunter’s checklist that may be helpful for sorting out what’s most important to you in a home. Keeping what you can afford to pay high on the list is a wise move.

One good place to start your affordability assessment is an online mortgage calculator. While the calculation is just a guide, it can help you see what’s in the ballpark and how much your monthly payment may fluctuate based on the size of your mortgage and other factors.

The numbers: Mortgage credit eases

Mortgage credit availability increased in November according to a report Dec. 9 from the Mortgage Bankers Association (MBA). The Mortgage Credit Availability Index (MCAI), increased 1.2% to 114.6 in November. The index was benchmarked to 100 in March 2012.

“Credit availability increased in November, largely due to the addition of jumbo loan programs that permit cash-out refinancing,” said Mike Fratantoni, MBA’s Chief Economist. “Home price appreciation and larger equity cushions have likely made some lenders more willing to allow certain borrowers to take cash out, while still low mortgage rates may make this a more attractive opportunity for some.”

What counts: This report is a reminder that mortgage credit may be more available than some prospective buyers think. If you’ve avoided seeking a mortgage in the past because you thought you might not qualify or that lenders were too tight with credit, remember the mortgage business is fluid, and mortgage underwriting may become less stringent over time. As the MBA’s chief economist points out home price appreciation and larger equity cushions may be creating opportunities that didn’t exist several months ago.

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