It’s no secret that it’s a tough market for home buyers.
In October, American consumers needed to earn $ 107,281 to buy a monthly mortgage of $ 2,682 for a “typical house,” Redfin. reported this week.
That’s 45.6% more than the $73,668 annual income needed to cover a mortgage payment in the past 12 months, the report found.
The main reason is rising mortgage interest rates, said Melissa Cohn, regional vice president at William Raveis Mortgage. “The bottom line of the mortgage has more than doubled since the beginning of the year,” he said.
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Despite the serious declines were reported this weekthe average interest rate for a 30-year fixed rate mortgage of $647,200 or less hovered below 7%, compared to below 3.50% in early January.
And clouds family values have softened in some markets, the average sales price is up from one year ago.
“Home prices have skyrocketed, mortgages have more than doubled and affordability is just being crushed,” said Keith Gumbinger, vice president of the mortgage website. MSM.
Meanwhile, a high cost of living is still cutting into American budgets, and inflation at 7.7% in October.
While the current situation may feel unpleasant for consumers, experts say there are a few ways to reduce your monthly mortgage payment.
For example, a high minimum wage This means a smaller mortgage with lower monthly payments, Gumbinger explained. “It’s more down to this type of environment that certainly can play a role in controlling mortgage rates,” he said.
Another option an adjustable rate mortgage, or ARM, which offers a lower interest rate compared to a fixed mortgage. The rate is then adjusted over a predetermined period to the market price at that time.
It might also be worth considering an ARM, if that’s you understand the risksCohn said.
If you’re planning to stay in the home for a few years, there’s a risk you won’t be able to refinance into a permanent mortgage before the ARM adjusts, he said. And in an environmental environment, it may be highly sensitive.
Your eligibility for a future refinance can change if your income drops or the value of your home drops. “There’s more risk, especially for first-time home buyers,” Cohn said.
Of course, housing prices and needs vary by location, which affects affordability, Gumbinger said. “Being patient and open is a good strategy for market conditions like this,” he said.