Prospective home purchasers have observed a significant price shift in house prices in the metropolitan Orlando area. This is coupled with a rise in mortgage rates and tougher mortgage rules for customers who carried substantial debt all through 2013.
According to Orlando realtors, Orlando homes put up for sale in the market have seen a sudden 20 percent increase in their listed price. According to Orlando Regional Realtors Association, buyers who bought a home for the first time at the fag-end of 2013 within 85 percent of the median price, and with a 10 percent down payment, were liable for an approximate monthly mortgage payment of $626, excluding insurance and taxes. This can be compared with the 2012 first-time buyers who paid just $453. As per calculations by Orlando real estate agents, the increase in mortgage payments will saddle home owners with an extra $2,000 a year when it comes to housing expenses.
This is evident in the words of Teresa Myers, a Cocoa resident who has been searching for an Orlando house to reduce her husband’s commute time. She has informed the realtors in Orlando about her $200,000 budget and is still looking for an ideal home.
Adding to the woes of the buyer is the fluctuation in Orlando mortgage rates. The mortgage rate in Orlando has fluctuated all through 2013 for the fixed rate 30-year mortgage, climbing from 3.46 percent in December 2012 to 4.57 percent in December 2013. According to economists, the mortgage rates in Orlando and also in the rest of the country will rise to five percent by the turn of 2015.
New mortgages harder to get
According to the US Census Bureau, home ownership in the Orlando metro area has reduced from 71 percent in 2008 to 63 percent in third quarter of 2013. Thus, a number of residents are finding it more convenient to rent a home than to own one. This makes more sense for would-be home buyers due to the new restrictions on mortgage qualifications, which were made effective from January, 2014.
New rules were introduced by the Consumer Financial Protection Bureau, which disqualify buyers from getting a standard mortgage if their credit card, auto payments and other debts totals 43 percent or more of buyer’s monthly gross income. The debt to income ratios of prospective home buyers could reach as high as 50 percent in previous years.