Even though I’ve been a Realtor for more than 32 years, it’s always been interesting to me how Buyers of real estate react when going through a loan pre-qualifying/pre-approval process and are informed what their monthly mortgage payments will be. Given where current real estate values are in Burbank, I thought it might be interesting for readers to get an idea what a hypothetical “monthly nut” would be based upon the current median price for a Burbank home. I’m sure like many of you, I remember when my family bought our first home, I thought the figure was astronomical and wondered “what are we getting ourselves into?” Of course, with the passage of time, growth in equity and perhaps a refinance or two later, that payment looked like a bargain and the myriad of benefits of owning real estate became every more apparent! However, play along with me here and take a look at what a lender colleague of mine came up with for me to illustrate what a Burbank homebuyer faces in today’s market:
Purchase Price: $870,000 (Burbank’s current median price)
Downpayment: (20% or $174,000) Loan Amount: $696,000
Interest rate: 4.25% 30-year Fixed rate
Monthly Payment: $3,424 (Principal & Interest only)
Property Taxes: $906 (per month; $10,972 annually)
Homeowners’ Insurance: $90 (per month; $1,080 annually’ no Earthquake coverage)
TOTAL MONTHLY HOUSING EXPENSE: $4,420
Annual Household Income Needed to Qualify: Approximately $138,000 (incl. approx. $500 other monthly debt)
Not exactly easy numbers for a young couple/first-time Buyer to buy into the “American Dream!” That said, obviously property is selling, with still not enough inventory to meet current demand. My advice for young, aspiring homeowners: start saving/investing early and aggressively AND be extra nice to your parents, who, if your lucky, may pass some of their hard-earned equity on to you to aid in your purchase!
