I was very surprised to see the statistics that the number of first-time home buyers rose to 47 percent of all home sales from 41 percent of transactions in last year’s study, and was the highest on record dating back to 1981. Moving from the previous high of 44% set in 1991.
With these first time home buyers they also ended up buying houses in the median price range of $156,000 down $10,000 from the year previous. Most of those first timers financed their home with FHA financing which seems to be the norm nowadays. With conventional financing requiring more down, the FHA option that only requires 3.5% down is an attractive option to buyers who haven’t padded the nest egg to pay for the down payment
the first time home buyers that actually came up with the down payment used a variety of sources 61% used their own savings accounts, 22% received a gift from a friend or relative, 6% got a loan from a friend or a relative, 6% tapped into their stocks and bonds, and another 6% tapped into their 401 K. The glaring positive in this is that 96% of consumers chose the fixed-rate mortgage. NO MORE ARM’s!!
These home purchases did not come with out sacrifices on their part whether it be cutting back on expenses, selling off “toys,” and spending less on clothing. I think these are all things we have to expect to do when making one of the largest investments that we will make in our lives.
The median down payment on houses was 8%, and the number of buyers purchasing homes with no money down fell from 23% in 2008 to only 15% currently. It seems we all may be learning our lesson and trying to use our money more responsibly. I hope this only continues to help the process, and our economy recover from mismanagement of finances on a global level.