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Study shows 55+ changing home buying priorities

[Jan 14, 2011.]


The study, "Housing trends update for the 55+ market," was conducted by the National Association of Home Builders (NAHB) and the Met Life Mature Market Institute. Study data indicate that the recession is influencing changing priorities for older home buyers. Significant findings include:

  • Fewer buyers use proceeds from an existing home sale to buy a new home. In 2007, 92 percent of 55+ buyers relied on proceeds from the sale of their previous home for buying a new home. That number has decreased to 55 percent as of 2009. Loss of home value and mortgage foreclosures resulting from the economic downturn are likely causes of this decline.

  • Aging "boomers" change market demographics. The study notes that 54,000 housing starts are expected in 55+ communities this year, a 30-percent increase over last year. Growth is expected to continue in this sector, with 79,000 housing starts in 55+ communities projected in 2012.

  • Reverse mortgage loans increase among single, less affluent borrowers. Reverse mortgage loans, also called home equity conversion mortgages (HECM), increased to 241,000 in 2009, a 54-percent increase since 2007. These loans allow homeowners 62+ to draw on home equity after paying off any existing mortgage loans.

Finding your best mortgage loan: evaluating more than rates

HSH Associates continues reporting comparatively low average rates for conventional and jumbo mortgage loans, but there is more to a mortgage loan than the interest rate alone. When shopping for a mortgage loan, knowing the answers to these questions can help with matching a mortgage loan to your financial needs and overall goals.

  • How long do you plan to live in the home you're buying or refinancing? If you may move within a few years, an adjustable rate mortgage (ARM) loan offering several years of very low interest rates may be an option. Two things to consider when comparing ARM loans with initial low rates: Make sure that deferred interest is not added to your mortgage balance, and that there are no prepayment penalties. Either of these scenarios would diminish potential savings associated with initial low mortgage rates.

  • How much home can you afford? Using affordability calculators and mortgage prequalification calculators can help with determining a ballpark price range for affordable homes based on your desired monthly payment and the formula generally used by lenders when approving home loans.

Working with a real estate professional specializing in the area where you want to buy and obtaining multiple mortgage quotes is worthwhile; you can gain "inside" information about potential neighborhoods and compare multiple mortgage loan options.


About Author:

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.

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