Page 12 - July 2024 Issue

DOLLARS AND SENSE by Tolbert Rowe

rst me Home Buying Gets Tougher and Tougher

Buying your rst home is a tangible Never have we seen mortgage rates likelihood of them dropping 1%-2%
sign that you have made it, you are go up so far so fast. Even during the in the next 12 to 24 months is slim?
a grownup. No more living at home Jimmy Carter years when interest
with Mom and Dad or other family rates went from 8%-9% in 1977, (the Housing inventory, or homes
members. No more paying rent year I graduated from high school) to available for sale will continue to
making someone else’s balance sheet the all time high of 18%-19% in 1981 be very limited and homes that
look good by increasing their equity rates only doubled. Obviously, the late are realistically priced will attract
in the home that they own, but you 1970’s was not a busy time in the real multiple o ers. e goal is to make
pay them for the right to live in it. estate market. your o er the one that nets the seller
the most proceeds with the least
e current market has made Compare that to now where rates number of contingencies.
the challenge of achieving home have climbed from a low of 2.5% in
ownership much more di cult. early 2021 to a high of nearly 8% in If you are considering making the leap
e increase in interest rates in late 2023. Mortgage rates tripled in and buying your rst home, you rst
combination with the lack of homes 2.5 years. Consider that it took four need some very basic information.
on the market has forced many years for rates to double in the late Like, “how much will my payment be
rst-time buyers to put the dream 1970’s and two and a half years to at a certain loan amount?”
of owning their rst home on the triple in the early 2020’s. Can you say, Do not get emotionally involved
back burner of their personal nance “Payment Shock!”. with buying a home if the mortgage
stove. Unfortunately, I do not see the payment will be more than what you
situation getting much better in the Rates are currently stuck the 7% range can “reasonably a ord”. Although
near future. and will probably stay in this range
for the rest of 2024. e consensus for your mortgage payment will be the
Even during all the ups and downs of Federal Reserve lowering of interest biggest monthly payment you will be
mortgage rates, starting at a peak of rates is that they may act the end of responsible for paying, you do have
18%-19% in the early 1980’s through this year. is is quite the change other obligations you will be required
the relatively stable 1990’s to early from earlier in the year, when it was to pay. e most obvious ones are the
2000’s where they stayed in the 6% projected they would lower rates three payments you are currently paying
-8% range, to the historic lows of 4% to four times this year. like car payments and insurance,
or lower rates of 2010 to 2020, rst credit cards, and student loans.
time homebuyers have been able to So, what should you do if you really As a homeowner you will take on
achieve their goal of owning a home. want to buy a home, be it your rst or
a move-up home, and have contented the added burden of paying property
Today, not so much. yourself that rates will not be as taxes, homeowners’ insurance, and
low as they previously were and the utilities. Can you, with these added
nancial responsibilities continue
“Your Mortgage Consultant Since 1985” to live the kind of lifestyle you are
currently living? Will you have
to sacri ce and stop doing certain
P or R things, like vacations, to “a ord” a
new mortgage payment. In other
words, how much a mortgage
payment can you “reasonably a ord.”
Too many times in the last several
115 E Dover St. Ste 3 - Easton, MD years, it is at this point that my
tolbert@baycapitalmortgage.com C. Tolbert Rowe, conversation with rst time
homebuyer’s that attitudes change.
www.baycapitalmortgage.com NMLS Vice President/Lending
182844 Enthusiastic about purchasing a
home at rst, but in the end very
410-819-3005 / cell 410-310-3520 disappointed at the cost.

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