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?
Do you think now is a good time to buy?
|Don't know||55||4.49 %|
Do you think now is a good time to refinance a home?
|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?
|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?
|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?
If you were to buy a home today, where would you get the down payment?
|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?
|Not sure||54||4.43 %|
If you bought a home today, how would you expect its value to change over the next five years?
|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 %|
|Don't know||27||2.21 %|
How old are you?
|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 %|