Tami Savage, Realtor

Florida Real Estate

Do You Have Enough Money Saved for a Down Payment?

By Tami Savage

Do You Have Enough Money Saved for a Down Payment?

One of the biggest misconceptions for first-time homebuyers is how much you’ll need to save for a down payment. Contrary to popular belief, you don’t always have to put 20% down to buy a house. Here’s how it breaks down.

A recent survey by Point2Homes mentions that 74% of millennials (ages 25-40) say they’re interested in purchasing a home over the next 12 months. The study notes, “88% say they have significantly less savings than the average national down payment amount, which is $62,600.”

Thankfully, $62,600 is not the amount every buyer needs for a down payment in the United States. There are many different options available, especially for first-time homebuyers (millennial or not). That amount can also be significantly less, depending on the purchase price of the house.

According to the National Association of Realtors (NAR), “The median existing-home price for all housing types in August was $310,600.” (These are the latest numbers available). NAR also indicates that:

“In 2019, the median down payment was 12 percent for all buyers, six percent for first-time buyers, and 16 percent for repeat buyers.” (See graph below):

2019 Median Percent Down Payment by U.S. Homebuyers: All Buyers 12%, First-Time Buyers 6%, Repeat Buyers 16%. Source: NAR

That means if a qualified first-time buyer purchases a home at today’s median price, $310,600, with a 6% down payment, in reality, the down payment only amounts to $18,636. That’s nowhere near $62,600.

Knowing there are also programs like FHA where the down payment can be as low as 3.5% of the purchase price for a first-time buyer, that up-front cost could be significantly less – as little as $10,871 for the same home noted above. There are also other programs like USDA and loans for Veterans that waive down payment requirements.

The Point2Homes study also shares how much millennials have indicated they’ve saved for a down payment. As we can see in the graph below, 39% have already saved enough for a down payment on a median-priced home. Another 47% are close to reaching that goal, depending on the purchase price of the home.

How Much Have You Saved for a Down Payment? 14% zero saved, 47% have up to $10,000, 19% have saved between $10,001 - $30,000, 8% have saved $30,001 - $50,000, 4% have saved $50,000 - $75,000, and 8% have saved over $75,000. For a median home price of $310,600, the people who have saved over $10k have enough for a 3.5% median down payment for first-time buyers. Somewhere in the 10k-30k savings range or more first-time buyers would have enough for a 6% median down payment. Somewhere in the 30k-50k range or more is enough for 12% median down payment. Source: Point2Homes

Unfortunately, the lack of knowledge about the homebuying process is keeping many motivated first-time buyers on the sidelines. That’s why it’s important to contact a local real estate professional to understand the requirements in your local area if you want to buy a home. A trusted agent and your lender can guide you through the process.

Bottom Line

Be careful not to let big myths about homebuying keep you and your family out of the housing market. Let’s connect to discuss your options today.

Today’s Buyers Are Serious about Purchasing a Home

By Tami Savage

Today’s Buyers Are Serious about Purchasing a Home

Today’s homebuyers are not just talking about their plans, they’re actively engaged in the buying process – and they’re serious about it. A recent report by the National Association of Home Builders (NAHB) indicates:

“…. Of American adults considering a future home purchase in the second quarter of 2020, about half (49%) are not simply planning it, they are actively engaged in the process to find a home. That is a significantly higher share than the comparable figure a year ago (41%), which suggests that the COVID-19 crisis and its accompanying record-low mortgage rates have converted some prospective buyers into active buyers.”

Share of Today's Buyers Actively Trying to Buy a Home with Q1 2019 at 46%, Q2 2019 at 41%, Q3 2019 at 44%, Q4 2019 at 43%, Q1 2020 at 49%, Q2 2020 at 49%

It’s no surprise that buyers are out in full force today. Many Americans now need more space to work from home, and the current low mortgage rates are providing an extra boost of motivation to enter the housing market.

If you’re considering selling your house, know that today’s buyers are serious about making a move. Your opportunity to sell your house in a market with high demand is growing, especially as more millennials enter the housing market too. The same report also notes:

“Of Millennials planning a home purchase in the next year, 57% are already actively searching for a home.”

Odeta Kushi, Deputy Chief Economist at First American, explains:

“When breaking down house-buying power by educational attainment for millennials in 2019, we find that the higher the education, the higher the household income, and the higher the house-buying power. In 2019, median house-buying power for millennials increased 16 percent relative to 2018.”

As demand for homes to buy grows and more millennials enter the market with growing buying power, the opportunity to sell your house grows too.

Bottom Line

Today’s buyers are serious ones and more millennials are helping to fuel that charge. So, if you’re considering selling your home, let’s connect today to determine your next steps in the process while buyers are actively looking.

Millennials Are on the Move as First-Time Homebuyers [INFOGRAPHIC]

By Tami Savage

Millennials are on the move as first-time homebuyers. For the longest time, many experts coubted whether Millennials (ages 18-36) valued homeownership as a part of their American Dream. Looking at the latest statistics from the National Aswsociation of Realtors' we can see that 'Old Millennials' (ages 25-36) are dominating the first-time homebuyer category. Of the millennials 100% are first time homebuyers with a median age of 32. 53% are married couples with a median age of 33, 17% are single females with a median age of 34, 17% are Unmarried couples with a median age of 30, and 10% are single males with a median age of 33. 2% of first time homebuyers do not fit into the categories above and represent an 'other' category. The median age of this group is 48 years old. Source: NAR & US Census

Some Highlights:

  • According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time homebuyers is 32.
  • With more millennials entering a homebuying phase of life, they are driving a large portion of the buyer appetite in the market, keeping buyer activity strong.
  • More and more “old millennials” (ages 25-36) are realizing that homeownership is now within their grasp, and they’re actively dominating the first-time homebuyer market!

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