Home Buyers Don’t Grasp ‘Mortgage Basics’

Many Americans begin looking for a home to buy without understanding the fundamentals of applying for a mortgage or what it takes to qualify for one, according to a new survey by Ally Home, a direct-to-consumer mortgage business.

Ninety-two percent of the more than 2,000 U.S. adults who responded to the survey admit they don’t know how much mortgage they can afford. Further, most say they’re confused about “rates” versus “points,” and only a third have a general idea of what their average closing costs might be. Only 8 percent are aware that the maximum debt-to-income ratio is usually 43 percent; most respondents believe it’s significantly lower or don’t know at all.

Ally Home is touting its free Mortgage Playbook, a resource that covers the basics of applying for a home loan. The book uses sports jargon to outline the mortgage application process, covering topics such as how to improve your financial fitness prior to applying for a loan, how to evaluate rate and points options, and how loan rates are determined.

Source: Ally Financial

For Renters, “Market Likely to Get Pricier”

Rising demand and a tightening supply is force both commercial and residential rents upward, and signs point to an increase in prices continuing over the next few years. 

 “The supply side is so constrained because nobody has been building for years” due to the economy and the struggle developers face in getting loans, Mark Stapp, professor of real estate practice at Arizona State University, told MSNBC.com. 

While rents have risen, the cost of home ownership has dropped. In fact, in 74 percent of major U.S. cities, renting may be more expensive than owning a home, a Trulia.com study has found.

In our region of Placerville, El Dorado County, California, residential renting has become more expensive. It’s a matter of few rentals available verses higher than normal tenant demand. Families that that were foreclosed on need to rent for a few years in hope of buying again, or? Let’s keep hoping for change and return to “Home Ownership” .

Source: “Office and Home Rent Will Keep Rising and Rising,” MSNBC.com (Feb. 6, 2012)