Have you purchased a home recently? A recent survey says you may be like many new home owners who spend most of their income on paying the mortgage. Data from the Federal government and associations for realtors and builders, a new mortgage study shows more people are purchasing homes even when they can’t afford to. They’re doing things like skimping, and purchasing homes and using creative financing.
The Bowes family moved into their three bedroom home in Albuquerque two weeks ago. Yolanda Bowes, the new owner: “We wanted to live in a good neighborhood where there was limited new development, and where schools were good to support appreciation of the home.”
The Public Policy Institute says whether it’s the investment or the lure of the American dream, more people are opting to buy rather than rent their homes. This study says people are spending more and more of their income on housing expenses. In some counties, mortgage holders spent 42 percent of their income on their mortgage payment, up eight percent. People are working two jobs or within the household there’s two wage earners. Then a lot of people that are house poor and don’t have a lot of spending money for other items. Mortgage broker Tom Petty said more than two thirds of the loans he handles are now variable rate mortgage loans; interest only loans should only be considered if you can put down a large down payment and pay off the principal before required.
More and more people are refinancing their current mortgages to take advantage of lower mortgage interest rates to lower their monthly payments. Others are cashing out equity in their homes to pay off higher interest debts.