Here’s a little ditty from our friends at LendingTree (Down Payments). It seems that, the average down payment for a conventional loan increased, YOY in the 4th quarter, from $45,545 last year to $47,585; about a 4.5% increase. The down payment on a conventional 30 year fixed rate loan grew about 17.5%, nearly 2 percent over the same period in 2013.
With all the hoopla about one of the barriers to home ownership being the large down payment requirements, people who are currently buying homes are putting down a little more money than those who purchased last year. Is this out of necessity or by design?
Maybe things are getting better. With the economy on the mend and home prices starting to rise, are people figuring that now is a good time to buy, especially with the low interest rates? If so, is it a good time for the industry to be reducing the required down payment when it appears the consumers may be coming to grips with what it takes to become a home owner? Are they now more willing to put a little more skin in the game with the expectation once again of a return on their investment?
A home is still a good investment. How many investments can you utilize while it still increases in value? The key is to approach the purchase as a place to live and raise a family, not as an investment that must have double digit returns over a short period. A stable economy with a strong job market will surely help the home value and this investment mature.
The question is will the economic recovery be sustained? Will gas prices and interest rates stay low? Will we experience a soft landing as the economy rebounds and rates and prices start to rise?
The answers to these questions are not definite. Many things may affect the outcome. However, it seems to me that now may be a great time to buy and put down as much as one can afford. At today’s mortgage rates, you may not find a much better investment and know you won’t find another one you can live in.
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