The challenge of buying a home for the first time can seem so daunting, and many first-time homebuyers are reluctant to purchase a home. Everyone needs a better understanding of just how much money is wasted on rent. First-time homebuyers should know the relationship between interest rates and affordability. As interest rates increase, affordability decreases. It was said that a homebuyer earning $60,000, with a 36 percent front-end debt-to-income ratio, could afford a 30-year fixed-rate mortgage of $245,310 in 2000. Today, that same buyer, assuming a 4 percent interest rate rather than an 8 percent rate can afford a home for $377,030. That’s a big jump in terms of quality and size. The longer the buyer waits, however, the more likely it is that the home will cost more. When you combine the advantages of low interest rates and moderate affordability, it is the perfect opportunity for first-time homebuyers.
The Federal Reserve Survey of Consumer Finances also has consistently reported that home ownership results in an increase in household net worth. For this this reason, homeowners create wealth by paying off their mortgages and building equity. As of 2013 report from the Federal Reserve, the average household that rents has a net worth of $5,500. In contrast, the average homeowner has a net worth of $195,500, and that’s 36 times the amount of those who rent.
For all of your real estate needs, and if you are ready to take the next step towards purchasing your new home, contact Cook Real Estate Services today at (678) 207-1505, or you can e-mail us at info@CookRES.com. Whether you are buying or selling, one of our trusted professionals will be there to help you every step of the way.
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