Most Buyers Would Break Their Budget for a Dream Home
Didier Malagies • August 26, 2020
Most Buyers Would Break Their Budget for a Dream Home
Jordan Borchard posted in
Housing in Housing News
Most Buyers Would Break Their Budget for a Dream Home – Study
Written by: Ryan Smith
Despite the economic turmoil wrought by COVID-19, nearly two thirds of home buyers are willing to go over budget for their dream home, according to a new study.
In a survey of more than 1,000 prospective homebuyers, LendingTree found that 64% would stretch their budgets in order to buy their perfect home. Millennials were even more likely to be willing to stretch their budgets, with 76% saying they would spend more to buy their dream home.
“I urge home buyers to be very cautious about going over budget,” said Tendayi Kapfidze, chief economist at LendingTree. “Many people underestimate the maintenance costs of owning a home. If you are stretched financially and underinvest in maintenance, it can diminish the value of your home.”
More than a third of buyers (37%) said that even finding a home within their budget was the most stressful part of the home-buying process. Nearly half (48%) of first-time buyers said staying in budget was their largest home-buying stressor.
“Overpaying is one of the downsides of very low interest rates,” Kapfidze said. “As many home buyers budget a monthly payment, lower rates translate into a higher mortgage amount. Coupled with tight inventory in some areas, it increases the risk of bidding wars over asking price.”
About one in six said they were most stressed because of the low housing inventory in their area, and another 16% said they were most stressed about trying to sell their current home.
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✅ the principal you borrowed ✅ all interest paid over the years ❌ It does NOT include taxes, insurance, or HOA unless noted. Because longer terms spread payments out more slowly, they lower the monthly payment but massively increase total interest paid. Below is a simple example to show how total payments change by loan term. ✅ Example: $300,000 loan at 6% interest 15-Year Mortgage Monthly payment: ≈ $2,531 Total paid: ≈ $455,682 Total interest: ≈ $155,682 30-Year Mortgage Monthly payment: ≈ $1,799 Total paid: ≈ $647,514 Total interest: ≈ $347,514 40-Year Mortgage Monthly payment: ≈ $1,650 Total paid: ≈ $792,089 Total interest: ≈ $492,089 50-Year Mortgage Monthly payment: ≈ $1,595 Didier Malagies nmls212566 DDA Mortgage nmls32432 Total paid: ≈ $956,140 Total interest: ≈ $656,140 ✅ Summary: Total Payments by Loan Term Term Monthly Payment Total Paid Over Life Total Interest 15-Year ~$2,531 $455,682 $155,682 30-Year ~$1,799 $647,514 $347,514 40-Year ~$1,650 $792,089 $492,089 50-Year ~$1,595 $956,140 $656,140 ✅ Key Takeaway A longer mortgage = lower payment, but the total paid skyrockets because interest accrues for decades longer. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
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Here are the main types of events that typically cause the 10-year yield to drop: Economic slowdown or recession signs Weak GDP, rising unemployment, or falling consumer spending make investors expect lower future interest rates. Example: A bad jobs report or slowing manufacturing data often pushes yields lower. Federal Reserve rate cuts (or expectations of cuts) If the Fed signals or actually cuts rates, long-term yields like the 10-year typically decline. Markets anticipate lower inflation and slower growth ahead. Financial market stress or geopolitical tension During crises (wars, banking issues, political instability), investors seek safety in Treasuries — pushing prices up and yields down. Lower inflation or deflation data When inflation slows more than expected, the “real” return on Treasuries looks more attractive, bringing yields down. Dovish Fed comments or data suggesting easing ahead Even before actual rate cuts, if the Fed hints it might ease policy, yields often fall in anticipation. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
