True or false: if you’re buying a home, you need to have at least a 20% down payment? If you answered true, you aren’t alone—so did 62% of Americans.
But in reality, that couldn’t be further from the truth—and you don’t have put off your home-buying dreams just because you can’t come up with 20% down!
While a 20% down payment will help you avoid private mortgage insurance (PMI), it isn’t some sort of home-buying hurdle that you must clear in order to buy. In fact, it’s far from the most common amount that U.S. buyers put down!
Here’s the truth about down payments—and why you shouldn’t let that 20% number prevent you from reaching your buying goals.
The Truth about Down Payments
According to NerdWallet’s 2019 Home Buyer Report, around 6 in 10 Americans think you need a 20% down payment in order to buy a house. Because of this, they also tend to think that it takes several years to come up with the necessary funds for buying.
Unfortunately, this way of thinking unnecessarily postpones plenty of people’s home-buying dreams!
The truth? The most common down payment amount—put forward by around 32% of buyers—was just 5% or less. Put that in terms of concrete amounts, and it translates to just $7,500 on a $150,000 home or $15,000 on a $300,000 home.
Other Common Down Payment Amounts
While 5% or less is the most common down payment amount, it’s still just one of the many options that buyers choose. Here’s how the rest of the numbers break down:
16% of buyers put down 6 – 10%
23% of buyers put down 11 – 20%
18% of buyers put down more than 20%
10% of buyers bought their home outright
A 20% down payment is a great goal, but you don’t have to feel locked into that amount! Instead, consider how much money you’d feel comfortable with putting down, then work from there.
Buyers are Optimistic
Despite prevailing misconceptions about down payments, buyers are still feeling optimistic about the market. Around 42% of Americans feel better about their home-buying prospects this year, which is up almost 20% from last year.
Additionally, 44% of people say that the current economic and political conditions make them more likely to buy in the next year, which is around a 10% increase from last year.
Buying a home is major step, so it’s important that you have trusted and experienced professionals on your side. At Linda Craft & Team REALTORS®, we have over 300 years of combined real estate experience, making us well-equipped to provide you with everything you need to find home-buying success.
You might think that since you’ve put some distance between now and high school and college, your days of memorizing vocabulary and learning new definitions is long gone. But if you’re buying a home, then you’re going to want to dust off those skills and start studying up.
Real estate comes with its own confusing jargon, and knowing what each term means makes you all-the-more prepared to tackle the process. Here are the top five homebuying acronyms that you should add to your vocabulary!
APR, or annual percentage rate, represents the annual cost of borrowing money based on your loan amount, interest rate, and other specific fees. The calculations for APR are a little confusing, but there are plenty of online calculators that can help you figure out what the number might look like for you!
FRM stands for fixed-rate mortgage, which is one of the most common types of mortgage. Luckily, this one pretty much means what it sounds like: with FRM, your interest rate will not change during the entire term of your loan.
One of the most important aspects of your finances that a lender looks at is your DTI, or debt-to-income ration. Your DTI is calculated by measuring your total monthly income against your total monthly debt payments. Ideally, you’d want to have around a 36% DTI.
If you can’t afford a 20% down payment, you’ll have to pay PMI, or private mortgage insurance. This acts as an added safeguard for lenders who work with you by ensuring that they’ll be protected from losses if you default on loan payments. Once you’ve paid off around 80% of your home, you’ll no longer have to pay PMI.
P & I
P & I is just a fancy way of saying principal and interest, which are the portions of your monthly mortgage payment that go towards paying off the money you borrowed to purchase your home.
Ace Your Real Estate Experience
Of course, these five acronyms aren’t the only ones that’ll come up during your buying journey—but we’ll be around to make sure you can handle any other letter combinations that get thrown your way.
Coffee or tea? Cake or pie? Rent or buy? Life is full of big questions—some a little harder to answer than others. But in the case of renting versus buying, there are a few big reasons why ownership still wins the battle.
That’s the big question posed by the most recent Bank of America Homebuyer Insights Report. The answer? A resounding yes. In fact, out of the modern homebuyers interviewed, 93% of respondents said that owning a home made them happier than renting, and 83% said that they would never go back to renting after owning.
It doesn’t just end with happiness, though—79% of homeowners believe that buying their own property has changed them for the better and 88% say it’s the best decision they’ve ever made.
On the flip side, according to the latest Zillow Housing Aspirations Report, 45% of renters regret not buying, with the biggest reasons being lack of customization opportunities, high rent payments, and lack of private outdoor space.
The Effects of Owning a Home
You hear a lot about the financial equity of owning a home, but Bank of America’s survey sought out information on the “emotional” equity of ownership—which brought up some interesting numbers.
When asked if they viewed the home as a place to make memories or a financial investment, more than half of respondents chose the former. After buying, more than 76% of people pursued new hobbies—including landscaping and gardening, cooking and baking, and interior design.
And it’s not just the individuals: family relationships also benefited. Homeownership allowed 49% of respondents to entertain more often and 24% to bring the entire family under one roof.
Current Homeowners versus Prospective Homeowners
If you’re still on the fence about buying a home, consider these numbers:
Time spent pursuing hobbies
Current homeowners: 82%
Prospective homeowners: 63%
The quality of social life
Current homeowners: 78%
Prospective homeowners: 58%
Current homeowners: 77%
Prospective homeowners: 42%
Quality of life overall
Current homeowners: 88%
Prospective homeowners: 70%
Ready to Become a Homeowner?
Owning a home comes with a myriad of benefits—both financial and emotional. If you’re ready to take the leap into homeowning, then congratulations!
Over the past few months, we’ve talked a great deal about the benefits of owning a home—and why today’s market is one of the best windows to buy.
With a new set of numbers released on home equity, we’ve got another major reason why owning a home pays: it forces you to save, and in the process, those savings only appreciate.
It’s All About Equity
As you pay off your home, you start building up your equity—which is, in short, the difference between the current value of the home and what you still owe on the home. As your home appreciates in value and you chip away at the payments, your equity increases. Think of it as a “forced savings account.”
During the housing crisis and recession from 2006 to 2008, it was common for homeowners to dip into their equity and pull out money for other big ticket purchases, which ended up spelling major trouble for their personal finances.
Since your equity is technically an asset, it’s part of your net worth. The greater your equity, the greater your net worth, the better your chance of building future wealth.
The Latest Numbers
According to a recent report from CoreLogic, the average homeowner gained a staggering $65,000 in equity over the last 5 years. Not only that, but another study from the Urban Institute found that 37.1% of all homes in the country are totally mortgage-free. Of the remaining 63% of homes, about half of them have at least 50% equity—and that number is only going up.
Crunch the numbers, and you’ll find that just over 50% of all homes in the country have at least 50% equity. That means a whole lot of homeowners are continuing to pay into that “forced savings account” and are setting themselves up for major future wealth in the process.
The Importance of Equity
By building up your equity, you’re ensuring that you have a firm financial base to stand on in the future. It does, however, take time to accumulate. That’s why it’s important to take advantage of current market conditions, and begin your journey to increased equity.
If you’re a millennial, then you’re probably a little tired of hearing all the criticism towards your generation. Buying avocado toast instead of saving money, always texting instead of calling—they’re all pretty unfair generalizations.
Another common criticism of millennials? That they never buy homes. But actually, that couldn’t be further from the truth! In fact, millennials represent the largest portion of homebuyers in the market.
And according to millionaire David Bach, buying a home is one of the best decisions you can make for your future equity.
It’s All About Owning
Since you’re likely working with limited funds, your first home probably won’t be your dream home—but that’s okay. Getting your foot in the door and buying a home is the stepping stone to building wealth and equity, according to Bach. Even if your budget isn’t as high as you’d like, it’s best to buy as soon as you can!
In Bach’s opinion, you should start by crunching the numbers. You might think you can’t afford a home, but setting clear goals based on concrete numbers will help put things into a realistic perspective.
A good rule of thumb? Make sure your home payments don’t total more than 30% of your take-home pay.
David Bach’s Background
Why should you trust what Bach has to say? Well, his resume speaks for itself. A self-made millionaire, Bach has written nine consecutive New York Times bestsellers.
Not only that, but he’s also one of the only business authors to ever have four books on the New York Times, Wall Street Journal, BusinessWeek, and USA Today bestseller lists at the same time. His book The Automatic Millionaire even spent 31 weeks on the New York Times bestseller list!
Additionally, Bach is considered to be one of the foremost authorities on finance, appearing as a contributor on NBC’s Today Show, ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS.
Dipping your toes in the waters of home-buying? Based on the latest numbers, you may want to consider jumping in. In fact, buying a home right now could lead to an equity boost of almost $50,000 in the next five years!
Take a look at a few numbers from the experts, see where home prices are headed, and learn how the Linda Craft & Team REALTORS® can help you today.
Home Prices are Steadily Rising
According to the most recent Home Price Expectation Survey (HPES), home values will appreciate by 4.1% by the end of 2019. That trend will continue well past this year, as well, with an average annual appreciation of 3.2% over the next five years. By 2023, you can expect a staggering 16.8% cumulative jump!
Maybe you’re thinking that those numbers are a little optimistic. We don’t blame you—but even the more pessimistic experts estimate a 6.7% cumulative appreciation over the next five years.
What This Means for You
Assuming those numbers all pan out, buying a home right now could mean major profits in the future. For example: let’s say you find a home you love, you make an offer, and you close for $250,000. By next year, that home’s value will have jumped to $260,000. By 2022, it’ll be almost $275,000. And by 2025? You’re looking at $292,000, a $42,000 jump since your initial purchase.
These numbers might sound too good to be true, but they’re calculated by a panel of over 100 economists, investment strategists, and housing market analysts.
Gearing up to Buy a Home?
Sold on buying a home? In all honestly, you won’t find a much better time than now. With mortgage rates still hovering at near-record lows and home prices steadily ticking up, you could buy a new home for a great price now and make an amazing profit when you list it later. Your future self—and future equity—will thank you.
Real estate trends are prone to change. After all, there are many factors that play into home prices and mortgage rates, and as the economy changes, the real estate market follows suit.
If you want to get the best possible outcome to your real estate endeavor, staying updated on current real estate trends is crucial to your buying and selling success.
Here are the three biggest changes currently happening in the housing market—and what they mean for buyers and sellers!
Interest Rates are Low…For Now
Interest rates play a huge part in the overall cost of your home, and right now, they’re the lowest they’ve been in years. As of June, rates are hovering right around 3.8%. Back in March, they were as high as 4.4%!
According to the latest info from Freddie Mac, those numbers could be here to stay for a while, but with the current unpredictability of the housing market, there’s no guarantee. So the sooner you buy, the better.
Tariffs Could Drive up Prices
What could tariffs on China possibly have to do with the housing market? Well, many of the tariffs will affect building materials like lumber and steel—and the National Association of Home Builders estimates that around $10 billion worth of those supplies come from China.
With an already low inventory of homes, the increased of cost in building a new home will likely further exacerbate the problem. The tariffs began in June, so the effects may not be fully felt for a little while—meaning now is a great time to buy.
The Economy is Cooling off
Previously, many economic experts thought we were headed for a recession this year. While that estimate has been pushed back, three leading surveys (the WSJ Survey of Economists, Duke University Survey of CFOs, and NABE Survey of Members) predict that it’ll happen sometime in the next 18 months.
That doesn’t mean there’s any need to panic, but it does mean that the current economic conditions might be the best that they’ll be for a while.
Ready to Buy Your Raleigh Home?
If you’re on the fence about buying or selling, the current housing trends indicate that now is the time to make some moves. Find your real estate success, and trust in the expertise and years of experience that Linda Craft & Team REALTORS® can provide.
Time and again, we hear from potential buyers that one of the most challenging parts of buying a home is saving up for the down payment.
Many people believe that they need a 20% down payment in order to buy a home, but that’s not really true. While 20% is a standard, it is by no means the only option for putting down a deposit on a home.
In fact, there are a wide variety of mortgage loans out there that may only require as little as a 3% down payment. If you’re still saving up for your home’s down payment, here are a few things to keep in mind about your buying timeline.
How Long Does it Take to Save up a 20% Down Payment?
This depends largely on your financial circumstances. How much you make in a year, your current debt and monthly expenses, and your saving patterns will largely dictate how much (and how quickly) you’ll be able to save.
Many financial advisors suggest saving around 20% of your monthly income throughout the year, and this is certainly a great place to start! However, if you want to buy a home as soon as possible, you may have to be a more aggressive saver.
It also depends on what state you live in. In fact, the number of years it takes a median-income earner to save up for a 20% down payment differs largely by state.
How Long Does it Take Buyers in North Carolina?
In North Carolina, it generally takes someone around two years to save up enough money for a down payment. In other states, depending on median housing prices, this may be as high as 30 years, or as low as a little over one.
But that’s just for the 20% down payment option. If you’re eligible for a 3% down payment program, it may only take you about half a year to save up for a down payment.
All in all, it depends largely on your financial situation!
How Much Should I Spend on Housing in a Month?
The age-old rule for handling your income is the 50/30/20 rule. Half of your monthly income should go to necessities like housing, healthcare, and food. 30% should go towards discretionary spending, and 20% should go to savings.
Experts in real estate agree that of that 50%, no more than 30% of your income should go towards your housing expenses.
How Do I Navigate the Financial Side of Buying a Home?
Find out about all the ways to celebrate Independence Day 2019 in Raleigh, Durham, Chapel Hill and beyond. Enjoy fireworks, parades, festivals and more.
Olde Fashioned Fourth of July Thursday, July 4th, 2019, 9 a.m. to 1 p.m. Historic Downtown Apex Flag-raising, inflatables, face-painting, karaoke, parade of wheels, fire department splashdown Free to attend. Might be cost for some activities.
Cary Independence Eve Celebration Wednesday, July 3rd, 2019, 6:30 p.m. Cary Arts Center
The Cary Town Band will celebrate and honor our nation’s veterans in this year’s Independence Eve Celebration. Speaker Deborah Tilton, a Specialist in the NC Army National Guard and decorated veteran, will answer the question, “What is a Veteran?” Musical selections will be played to honor those who have served. The band will pay special tribute to our military service personnel and their spouses past and present who have helped secure our freedom and liberty. For more info call (919) 469-4069. Free
Cary Independence Day Celebration Thursday, July 4th, 2019, 7:00 a.m. – 6 p.m. Fred G. Metro Bond Park, Boathouse Enjoy the fishing tournament, parade, and various activities. The activities start at 8 a.m. Free
July Fourth at Booth Amphitheatre Thursday, July 4th, 2019, 3 p.m. Koka Booth Amphitheatre Enjoy an afternoon and evening of fun, family festivities. The North Carolina Symphony will be performing. There will be a fireworks display at the end of the event. Free but there will be a charge for some of the amusements.
Town of Chapel Hill 4th of July Fireworks and Community Celebration Thursday, July 4th, 2019, 6 p.m. Southern Village, 400 Market Street, Chapel Hill
The celebration and fireworks are moving from Kenan Memorial Stadium this year. They will be launched from Scrogg’s Elementary School, and the prime viewing areas will be Southern Village, where there will be a pre-fireworks community celebration with kids’ activities and music, and Southern Community Park, 1000 Sumac Road.
Clayton’s Fourth of July Celebration Thursday, July 4th, 2019, 4 p.m. Municipal Park, 325 McCullers Drive, Clayton.
Live music by Big Love, free watermelon slices, free ice cream, inflatables, fair rides, and more.fireworks at the end of the day.
Children’s Independence Day Celebration Thursday, July 4th, 9:30 a.m. Durham Central Park, 501 Foster Street, Durham Bring the kids and celebrate the birth of our nation in this fun and patriotic parade. Come early to help your kids decorate their bikes, big wheels, tricycles, wagons, even strollers. Parade starts at 10:30 am. Free popsicles and fire truck tours after the parade. Free
Durham Fourth of July Celebration Thursday, July 4th, after the ballgame ends Durham Bulls Athletic Park Patriotic fireworks show immediately following the USA baseball game. Free, but you should consider buying tickets to the baseball game to make sure you get in. This is strongly suggested. Follow the above link for more information.
Watts-Hillandale Fourth of July parade and Celebration Thursday, July 4th, 10 a.m. Oval Drive Park, 2200 W. Club Boulevard, Durham This tradition started in 1950 with six neighborhood kids riding their bikes up and back on the sidewalk. Today, 1,000 people attend. The parade is led by the fire truck and features patriotic singing. Afterwards, participants cool down with bottles of ice-cold Coca-Cola.
Independence Day Celebration at Stagville Friday, July 5th, 2019, 11 a.m. Stagville State Historic Site 5828 Old Oxford Highway, Durham Free
Frederick Douglass Community Reading: Commemorate Independence Day with a community reading of Frederick Douglass’ powerful Fourth of July address, “What to the Slave is the Fourth of July.” This is a participatory event, open to people of all ages! We will provide copies of the speech to all attendees, and read it out loud together as a community.
Independence Day Celebration Wednesday, July 3rd, gates at 6 p.m., Spare Change plays at 6:30 p.m., fireworks at sundown South Park, 900 S. Main Street Food vendors, music, free rides for kids, splash pad 6 p.m. until sundown, and fireworks. Free
Garner Independence Day Celebration Wednesday, July 3rd, 5 p.m. Lake Benson Park, 921 Buffaloe Road, Garner Celebrate Independence day with food, music, and inflatable games. The North Carolina Symphony will be performing. The event will end with a fireworks show.
Hillsborough’s Independence Day Picnic Sunday, June 30th, 11 a.m. Eno River Farmers Market Pavilion Live music by Alabama Slim and more. Food trucks and family activities in River Park until 3 p.m. Free
Holly Springs Independence Day Celebration Friday, July 5th, 5 p.m. Jefferson L. Sugg Farm at Bass Lake Park A pet-friendly festival with food, games, crafts, activities, and more. There will be a fireworks display at 9:15. Free
Knightdale Fourth of July Celebration Thursday, July 4th, 5 p.m. Knightdale Station Park This celebration features food trucks, vendors, and kids’ activities, as well as a live performance by The Embers. There will be fireworks to close out the celebration. Free
Morrisville Fireworks Wednesday, July 3rd, 2019, 6 p.m. Morrisville Community Park Fireworks and food trucks. Bring blankets, chairs, and tents to watch the show. Free, but bring money for the food trucks
Raleigh Fireworks Thursday, July 4th, 6 p.m. PNC Arena/Carter-Finley Stadium/NC State Fairgrounds Area Raleigh’s fireworks will take place in the PNC Arena area.
Fireworks will be launched from property owned by North Carolina State University along Trinity Road, which is adjacent to PNC Arena, Carter-Finley Stadium, and the North Carolina State Fairgrounds. There are no major visual obstructions in the vicinity so the fireworks can be viewed from all directions.
Parking lot gates will open at 6 p.m. and fireworks are scheduled to launch at 9:30 p.m. There will be free parking at the PNC Arena lots, Carter-Finely Stadium lots, and North Carolina State Fairgrounds Bunn Field lots along Trinity Road.
Finley Freedom Festival Sunday, June 30th, 2019 6:30 p.m. A.E. Finley YMCA, 9216 Baileywick Road, Raleigh Free
The whole community is invited. You don’t need to be a member of the YMCA. Music, games, face painting, food vendors, balloons, and afireworks show.
Brier Creek Independence Day Celebration Thursday, July 4th, 7 p.m. Brier Creek Commons Games, bounce houses, prizes, and face painting. Ends with a fireworksdisplay at dusk.
Joel Lane House Celebration Thursday, July 4th, 11 a.m. to 4 p.m. Joel Lane Museum House The historic Joel Lane Museum House offers free admission on July 4th. Take a tour of the house, and enjoy historical activities. Free
Independence Day Celebration at the State Capitol Thursday, July 4th, 11 a.m. to 4 p.m. NC State Capitol, 1 E. Edenton Street, Raleigh This great Raleigh tradition includes a naturalization ceremony for new citizens and patriotic music by Raleigh Concert Band. Check back soon for more information. Last year it also featured carriage rides, food trucks, and free family-friendly activities. Free
Rolesville Fourth of July Parade and Celebration Thursday, July 4th, 5 p.m. 121 Redford Place Drive The event will include live entertainment, food trucks, a beer garden and a fireworks display.
Selma’s all-American Festival Thursday, July 4th, 2019, 6 p.m. Uptown Selma A family-fun event featuring food, special events, a children’s area, and fireworks. Free
Smithfield Independence Celebration Sunday, June 30th, 2019, 6:30 p.m. South Third Street, Historic Downtown Smithfield Food vendors, water wars, and music by The Seaside Band. The celebration ends with a fireworks display at 9 p.m.
Wake Forest Fireworks Display Wednesday, July 3rd, 5:30 p.m. Heritage High School, 1150 Forestville Road, Wake Forest The band, Crush, is performing, followed fireworks. Free
Wake Forest Children’s Parade Thursday, July 4th, 10 a.m. North Main Street Children can ride their bikes, walk, or be pulled in a wagon along North Main Street. Free
Arts and Games in the Park Thursday, July 4th, 11 a.m. Holding Park, 133 West Owen Avenue Arts activities for kids Free
Wendell’s Independence Day Celebration Thursday, July 4th, 10 a.m. to 2 p.m. Wendell’s annual Independence Day celebration features a citizen’s and children’s parade down Main Street, starting at Wendell United Methodist Church, and ending at the J. Ashley Wall Town Square. Free
Money magazine named the Greater Raleigh area as the Best Place to Live, and Forbes has ranked this area #1 Best City for Jobs and #1 Best City for Education. If you are looking for a home in the Triangle, we can help.
Contact us at 919-235-0007 and we can schedule your personal tour of neighborhoods or homes in your desired area.
Interest rates are at a historic low. In fact, they’ve been on a slow decline since November of 2018, resulting in some of the best mortgage interest rates we’ve seen in a while!
In fact, these are the lowest they’ve been since January 2018. If you’ve kept up to date on the Raleigh real estate market, you may have encountered conflicting information about whether or not now is a good time to buy a home. We’re here to set the record straight.
Market experts at Freddie Mac predict that rates will rise back to 4.6% by the end of 2019. This is sending would-be homebuyers a strong signal: now is the best time to buy a home in the greater Raleigh real estate market!
Lock In Those Low Interest Rates
If you buy a home in Raleigh now, or before the end of the summer, you’ll lock in these historically low interest rates. Your mortgage interest rate has a huge effect on your monthly payment, and the lower they are the less you’ll have to pay over the long run!
So, if you’ve been thinking about about buying a home in Raleigh, now is the best time to act. With high inventory and low mortgage rates, you stand to make the deal of a lifetime.