Almost half (42%) of the residents in Missouri plan to buy a home within the next five years, according to the recently released BMO Harris Home Buying Report. Buyers surveyed indicated they plan to pay an average of $242,000 for a home when they move and almost half of the potential home buyers have indicated they are willing to get into a bidding war to get the home they want.
Report Highlights:
- Buyers expect to make a down payment of 20 percent on average
- Seventy-five percent are confident they will have the money they will need to make a down payment on their next home.
- Thirty-five percent of current tenants are worried they will not be able to afford to purchase a home.
- Twenty percent expect to buy a home within one year, twenty-three percent within two years and forty-two percent within five years.
“Going from renting to buying is a big step, so it’s important to work with someone who knows the ins and outs of mortgages,” said Jeff Fothergill, St. Louis Mortgage Market Manager, BMO Harris Bank. “Whether you are a first-time home buyer or a veteran homeowner, it’s important to have a mortgage professional who will be able to explain the process, breakdown the numbers, and identify the mortgage options that are suitable for your particular situation.”
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BMO Harris offers the following advice for those searching for a house this spring:
- Get pre-qualified: Get a head start on planning by getting pre-qualified for a mortgage before setting out to lock down the perfect home.
- Stress-test your budget: Stress-test your financial budget using a mortgage payment based on a higher interest rate. If rates rise even 1 percentage point, you will need an additional $107 per month on a $200,000 mortgage.
- Live within your means: Stick to the “one-third” rule to ensure you’re living within your means. Total housing costs (mortgage payments, property taxes, heating costs, etc.) should not consume more than one-third of overall household income.
- Think carefully about fixed vs. variable: While variable rate mortgages have been a winning strategy over the long term, fixed rate mortgages (currently near historic lows) come with the peace of mind of being insulated against rate increases.