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Affordability Index|Housing Affordability Index| Housing Affordability Index-上海工商房产网
Lenderhomemortgage R Home Lender Ko 1 Lender Home Mortgage
, and adds one quarter of a percentage point to the mortgage rate for the required private mortgage insurance. The first-time home is calculated at 85% of the median price of all existing homes purchased. Some economists maintain that every one-point increase in the home mortgage interest rate results in 300,000 fewer home sales.
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n indicator of the proportion of the population that can afford to buy the average home sold during the current period. There are many types of affordability indexes in use. One of the best-known is the index compiled by the National Association of Realtors. The index is formed by the ratio of a percentage of the average income of all families in the area to the monthly loan payment needed to purchase the average priced home sold in that area. An index value of 1.00 indicates that half of the families in the area could afford to buy the average home. The higher the index, the more affordable is the housing in the area.
Real Estate Dictionary:
A measurement of housing affordability compiled by the National Association of Realtors® and other groups. The intent is to measure the ability of area residents to buy homes in the area. A typical index compares median income to the income required by lenders for a loan large enough to buy a median-priced home. A median income higher than required is interpreted as an affordable condition, and the index will be greater than 100 or 1.00, depending on how it is expressed. Values below 100 or 1.00 signal unaffordable conditions. Indexes are available for various geographic regions, as well as specialized indexes for first-time buyers.
Example: The median family income in Somewhere, USA, is $4,000 per month. The Qualifying Ratio of principal and interest payments to income used by many lenders is 28%; this would be $1,120 per month (0.28 x $4,000 = $1,120). The median price of homes in Somewhere is $125,000. An 80% loan would be for $100,000, which (at 6% interest over 30 years) requires principal and interest payments of $599.55. The affordability index value is the result of comparing the median qualifying income of $1,120 to the $599.55 payment to derive a ratio of 1.868, which may be multiplied by 100 for an index value of 186.8.