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Now is a reasonably good time to refinance a home, but it's less clear whether this is the right time to buy. At least, that's the view of the nearly 1,200 people who responded to our Mar. 27 Reader Survey.
Approximately 68% of the respondents said they would refinance now -- and an additional 12% have already done so. About 60% said they would refinance to lower their monthly mortgage payment, while 19% said their motivation would be to shorten their loan term. Only about 7% said they would refinance to borrow more money against their property. Some 67% of those who responded said they already own a home.
SAFER THAN STOCKS? By a narrow margin of 39.5% to 36.9%, respondents said this isn't a good time to buy a home -- presumably because of the recent runup in prices across the country (see BW, 3/11/02, "The Homes Keep Selling") or perhaps beause of uncertain job prospects.
And for the most part, those who might buy said they would approach the purchase prudently. For instance, nearly one-third would buy now to take advantage of low interest rates, 22% would trade up after capturing the appreciation in their current home, and 20% would buy simply because they need a house. Only 11% would buy a home because they see it as a safer investment than stocks.
Moreover, some 65% of those who responded would make a down payment of 20% or more. And 71% would want a mortgage payment of no more than 30% of their gross income -- within the guideline that most experts suggest. Interestingly, 47% said they would use savings for a down payment, while 35% said they would use profits from an existing home. Only 6% would rely on stock market winnings.
Those who responded to this unscientific survey (so-called because anyone who wishes to can participate) ranged in age from their 20s to 55-plus, though the largest concentration -- about 53% -- gave their age as between 25 and 39.
Here are the complete results:
Do you currently own a home?
Option
Total
%
Yes
816
66.67 %
No
408
33.33 %
Do you think now is a good time to buy?
Option
Total
%
Yes
453
36.95 %
No
484
39.48 %
Maybe
234
19.09 %
Don't know
55
4.49 %
Do you think now is a good time to refinance a home?
Option
Total
%
Yes
827
67.79 %
No
99
8.11 %
I've already refinanced recently
152
12.46 %
I don't own a home
142
11.64 %
What's the best reason for refinancing now?
Option
Total
%
Lower the monthly mortgage payment
718
59.14 %
Borrow more money against the property
86
7.08 %
Shorten the term of the loan
227
18.7 %
I don't own a home
158
13.01 %
Not sure
25
2.06 %
If you were to buy a home now, what would your primary reason be?
Option
Total
%
To invest in something safer than stocks
132
10.89 %
To take advantage of low mortgage interest rates
400
33.00 %
To buy before home prices go too high to afford
174
14.36 %
To capture the appreciation in a home you own now and use it to trade up or trade down
262
21.62 %
A simple need for shelter
244
20.13 %
If you were to buy a home today, what size down payment would you make as a percentage of the purchase price?
Option
Total
%
50%
176
14.39 %
30%
182
14.88 %
20%
445
36.39 %
10%
235
19.22 %
5%
135
11.04 %
0%
50
4.09 %
If you were to buy a home today, where would you get the down payment?
Option
Total
%
Savings
575
47.21 %
Stock market profits
73
5.99 %
Borrow from family and friends
47
3.86 %
Sell an existing home
436
35.8 %
I can't afford a house right now
62
5.09 %
Not sure
25
2.05 %
What percentage of your gross monthly income are you willing to spend on a monthly mortgage payment?
Option
Total
%
20%
333
27.32 %
30%
542
44.46 %
40%
160
13.13 %
50%
77
6.32 %
Other
53
4.35 %
Not sure
54
4.43 %
If you bought a home today, how would you expect its value to change over the next five years?
Option
Total
%
Rise by 20% or more
356
29.16 %
Rise, but by less than 20%
511
41.85 %
Remain stable
193
15.81 %
Drop by less than 20%
85
6.96 %
Drop by 20% or more
46
3.77 %
Other
3
0.25 %
Don't know
27
2.21 %
How old are you?
Option
Total
%
25 to 29
193
15.82 %
30 to 34
244
20.00 %
35 to 39
217
17.79 %
40 to 44
150
12.3 %
45 to 49
129
10.57 %
50 to 54
117
9.59 %
55 or more
148
12.13 %
Other
22
1.80 %
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Copyright 2002 , by The McGraw-Hill Companies Inc. All rights reserved.
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