Homebuyers sometimes pour every dollar they have into the transaction. But it’s important to maintain a reserve, should something unexpected strike.
How important? A new study found that buyers with post-closing liquidity of three months or more were five times less likely to default on their mortgages.
Specifically, the research by the JPMorgan Chase Institute found that borrowers with three of four mortgage payments’ worth of money in the bank had a three-year default rate of 0.3 percent. On the other hand, the default rate for those with less than the cash equivalent of one month’s payment was 1.8 percent.
While neither of those is particularly high, the difference is striking -- so much so, that buyers should consider slowing the purchase process down until they’ve built up a cushion, should something go wrong after they move in.
Sign of the Apocalypse, Part One (apologies to Sports Illustrated): Stock brokerage EF Hutton has admitted in court that it has defaulted on its mortgage on the 10-story EF Hutton Tower in downtown Springfield, Ohio -- one of the largest buildings in the city. The troubled company had suspended operations in April.
In its court filing, the firm agreed that it owed more than $4.6 million on a loan taken out just last year. It also owes Clark County $67,000 in back property taxes, according to the Springfield News-Sun, and $7.5 million on an unsecured note it used to purchase the structure in September 2016.
Sign of the Apocalypse, Part Two: A Pennsylvania bank has filed a foreclosure action against the Conneaut Lake Park Volunteer Fire Department to collect more than $400,000 in unpaid debt, interest and penalties. This follows a judgment the bank filed against the department for defaulting on three construction loans.
The bank wants the building back so it can sell it for some $382,000, according to the filing. Meanwhile, the fire department, which was organized in 1933, remains active answering calls; it serves the western portion of Sadsbury Township, near Philadelphia. Its social club, with a restaurant and liquor license, remains open.
Selling a house makes some people want to cry -- more than once, according to research from Zillow. And the simple act of living in a house or apartment causes some folks to lose sleep over covering their monthly payments, says Bankrate.com.
The sales process is so stressful that more than a third of the sellers queried said they were brought to tears. Of those, 1 in 5 said they had cried at least five times. Millennials and parents were the most likely to tear up.
“Our survey found more Americans were more stressed over selling their homes than planning a wedding, getting fired or becoming a parent,” said Zillow’s Jeremy Wacksman.
Stress comes in many waves, according to the survey. Some 70% were freaked out over uncertainty about their asking price, and 69% worried their homes wouldn’t sell in their desired time frame. Even after accepting an offer, 65% stewed about whether the contract would fall through.
Buying another house at the same time you’re selling is especially daunting. Nearly 7 out of 10 mistimed the process, with more than a third admitting the sale of their old house took longer than expected.
Meanwhile, Bankrate’s poll of 2,500 people found that 18% lose sleep worrying about making their mortgage or rent payments. Almost a third toss and turn over everyday expenses.
You’ve heard of storm chasers, those bravehearts who follow tornadoes as they cross the land. Now come the baby chasers: baby boomers who plan to move near their grandchildren when they retire.
Consulting firm Meyers Research says 25% of boomers are following their adult children so they can be closer to their kids’ own youngsters, even if it means moving to another state or less favorable climate. That’s just the opposite of previous generations, who moved away from their children, not to them, says the firm’s Tim Sullivan.
According to director of economic research Ali Wolf, Grandma and Grandpa want to downsize, but without sacrificing quality. Their preferred house has less than 2,500 square feet -- “smaller, but not small,” says Wolf.
The firm found that boomers hope to pay for their new digs with the proceeds from the sale of their current residences.
The item above begs the question: How close is too close, when it comes to living near family? An Ally Home survey put that question to some 2,000 adults across all age demographics, and the largest segment of respondents said that a drive of 15-45 minutes is just right.
In other words, grandparents, siblings and adult children should all maintain some distance from one another if they want to maintain healthy relationships.
A little more than a third (37%) of all respondents agreed that family should not live close enough to just pop in whenever they want, with an even greater percentage of millennials (42%) feeling that way.
Finally, a word of caution to the old folks thinking about becoming baby chasers: By a slim percentage point, adults would rather have their siblings and/or their own adult children living nearby than their parents.