Unison Survey Reveals 4 in 10 Americans Find Saving for a Down Payment the Biggest Financial Barrier to Home Ownership

Although 77 Percent Agree Buying a Home Is a Good Financial Decision, Data Shows Why Many Do Not Follow Through

SAN FRANCISCO, Sept. 19, 2017 (PRNewswire) Unison Home Ownership Investors, the leading provider of home ownership investments, today announced findings from its survey of 2,018 Americans, conducted by Atomik Research, on the biggest barriers to home ownership. The findings reveal that there are significant generational and regional differentiators when it comes to housing, including how much is being spent on rent, flexibility in budget and compromises for the ideal home location. While majority of Americans agree that buying a home is a good financial decision, saving enough money for a down payment and the process of getting approved for a loan are the major financial barriers.

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The New York Fed’s recent Household Debt and Credit Report shows total consumer debt in Q2 2017 has increased by $114 billion to $12.84 trillion and student loan debt alone reached $1.3 trillion. Between skyrocketing rents, student loans and debt to pay off, many Americans have a hard time budgeting for a down payment. To understand changes in home purchasing behavior and industry perceptions, Unison’s survey dove deep into the decision-making process to understand barriers of entry, impact on monthly financials and accessibility to additional funds.

The Decision-Making Process to Buy or Not to Buy a Home

Although the majority of Americans understand that owning a home is a sound investment and are willing to make sacrifices for the ideal place, they are not ready to follow through with a purchase. Part of this is a result of not fully understanding the financial benefits or trusting the credibility of information available.

  • Majority of respondents (77 percent) agree that buying a home is a good financial decision, however, 15 percent admit they are not comfortable when it comes to understanding the implications that purchasing a home has on personal finances.
  • Over half (63 percent) agree to some extent that home ownership can reduce the stress and anxiety associated with rentals and moving, and improve mental health.
  • 54 percent agree to some extent that a home mortgage is often less expensive than renting, which can improve family health by freeing up money for healthier food and doctor appointments.
  • Nearly half of respondents (46 percent) would accept a financial strain if it meant living in a neighborhood with high quality schools and was close to good job opportunities.
  • When receiving information on buying a home – 54 percent would trust the credibility of their local realtor/real estate agent; 43 percent would trust their family and friends, or their bank – and only 12 percent would trust their local newspaper.

Financial Barriers Holding Prospective Buyers Back

Once the value of home ownership is understood, there are other financial factors stopping prospective buyers from moving forward. From rising property prices to not being able to save enough money for a down payment, people would rather avoid the hassle. Also, there’s a disconnect between what the respondents felt was required of a down payment for a mortgage, versus what is considered reasonable.

  • Saving for a down payment is the biggest financial barrier for 41 percent of those looking to become home owners; 30 percent find it a headache to get approved for a loan.
  • 56 percent of respondents believe that low wages and debt make it hard to save money in their area.
  • However, the high price of rental homes and apartments are also becoming a major concern for 57 percent of respondents, followed closely by cost to buy or own a home in their area (53 percent).
  • In fact, 66 percent of those surveyed admit paying between $500 and $2,000 per month for rent or mortgage. And, more than half (55 percent) admit this to be a strain on their monthly budget.
  • While 3 in 10 would expect their bank to require a 10 percent down payment for a mortgage, 24 percent felt a 5 percent down payment would be a more reasonable amount.

Generational and Regional Gaps to Home Ownership

The survey found that Millennials, compared to Baby Boomers and Gen Xers, are also far less likely to take the plunge. In addition, in major metro cities where housing is expensive, people are more likely to spend outside of their budgets to purchase a home.

  • Millennials (56 percent) are more likely to be concerned about the cost to buy or own a home than Baby Boomers (47 percent).
  • 56 percent of Millennials reported that they felt ‘very comfortable’ or ‘somewhat comfortable’ understanding the financial options available for purchasing a home.
  • Millennials (38 percent) are less likely than Gen X (51 percent) and Baby Boomers (55 percent) to agree that home ownership allows for deductions on federal, state and local income taxes.
  • Millennials (65 percent) are more likely than Gen X (59 percent) and Baby Boomers (51 percent) to view mortgages as an opportunity to own a home by the time they retire.
  • Millennials (32 percent) are far less likely to own their home compared to Gen X (52 percent) and Baby Boomers (65 percent).
  • Nearly 60 percent of Millennials report rent and mortgage payments as a strain on their budget each month, compared to 58 percent and 43 percent for Gen X and Baby Boomers, respectively.
  • Cities where housing is most expensive (New York City – 59 percent and San Francisco – 54 percent), respondents were most willing to spend outside their budget if the neighborhood had better schools and job opportunities. Portland, Oregon (35 percent) and Hartford, Connecticut (36 percent) were least likely.
  • Los Angeles had the highest percentage of participants paying over $2,000 per month for rent or mortgage (27 percent), compared to the average of 7 percent.
  • Nearly a third (32 percent) of respondents in San Francisco expect they would need to put down 20 percent for a new home mortgage.

“At Unison, we want to make home ownership a reality for more people. To do so, it’s important to study the current landscape and get a granular understanding into why the home ownership rate for the first-time buyer demographic has dropped over the last decade,” said Brian Elbogen, director of research, Unison. “While this survey confirms that saving enough money for a down payment is the biggest financial barrier, we also found that there is a missed opportunity for those who do not understand the benefits of home ownership, and that there are alternative financing options available.”

Methodology

The Unison survey was conducted by Atomik Research on a sample of 2,018 general population respondents in the United States and in accordance with MRA guidelines and regulations. The online survey was fielded between August 7 and 11, 2017. Of the survey participants, 100 respondents were in each of the following cities: Baltimore; Boston; Chicago; Hartford/New Haven, Connecticut; Los Angeles; New York; Norfolk-Portsmouth-Newport News, Virginia; Philadelphia, Phoenix; Portland, Oregon; San Francisco; and Seattle. Atomik Research is an independent creative market research agency that employs MRA certified researchers and abides to MRA code.

For more information on Unison, please visit www.unison.com.

About Unison Home Ownership Investors

Unison is the leading provider of home ownership investments, modernizing home financing through long-term partnerships. Unison works with lenders, regulators and institutional investors to integrate home ownership investing into the U.S. housing finance system. Unison HomeBuyer helps purchasers buy the home they want with less debt and risk, typically by doubling the down payment. The larger down payment makes it easier to qualify for a loan, increases buying power, lowers the monthly payment and/or allows a buyer to reserve cash. Unison HomeOwner provides current homeowners with cash to eliminate debt, remodel, pay for school, invest or as a cash cushion, without the added debt or payments of a home equity loan or HELOC.

Unison’s platforms have received prestigious recognitions including the FinovateSpring 2017 and Benzinga 2017 Best of Show awards. Headquartered in San Francisco, Unison operates in 13 states and has secured over $300M in total capital. For additional information, visit www.unison.com.

Media Contacts

Michael Micheletti
Director of Corporate Communications
(415) 365-0092
Michael.micheletti@unison.com

Ivy Chen
Account Director, MWWPR
(415) 580-6133
ichen@mww.com

NAR Infographic: A Dollar a Day: Simple Ways to Save For a Down Payment

Washington, D.C. – Sept. 6, 2017 (PRNewswire) Approximately 60 percent of homebuyers financed their home using a 6 percent – or less – down payment, according to data from the National Association of Realtors®. With the most recent median existing-home price clocking in at $258,300, a 6 percent down payment is $15,498. NAR has some simple suggestions for potential homebuyers on how they can cut costs and save for that down payment.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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Down Payment Holding Back Renters from Buying a Home

– Almost 70 percent of renters in 20 U.S. metros say coming up with the down payment is holding them back from homeownership, according to the first Zillow Housing Aspirations Report

– Saving for a down payment was a barrier for more than two-thirds of renters surveyed in a new Zillow survey, topping other hurdles such as job security and qualifying for a mortgage.

– About half of renters surveyed said debt and qualifying for a mortgage were barriers to homeownership.

– Saving for a down payment was a barrier to the greatest share of renters in San Jose, San Diego and Los Angeles — a few of the most expensive rental markets in the country.

– A 20-percent down payment on a typical U.S. home costs more than two-thirds of the national median annual household income. In pricier markets, it can cost more than 180 percent of the average annual income.

Seattle, WA – April 12, 2017 (PRNewswire) Even though a mortgage payment is more affordable than a rent payment on a monthly basis(i), renters say they can’t buy a home due to the pricey down payment, according to the first Zillow® Housing Aspirations Report™ (ZHAR)(ii).

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Almost 70 percent of renters surveyed cite the down payment as a greater barrier to homeownership than debt, job security and qualifying for a mortgage(iii). Just over half of renters cite qualifying for a mortgage as a barrier to homeownership, and half say debt is holding them back. Almost 40 percent of renters say job security is keeping them from buying a home.

The U.S. homeownership rate is near an all-time low and has been falling since 2004, although members of the largest generation of Americans — millennials — are coming of age and starting to think about buying a home and settling down. Rents are also at record highs, costing almost 50 percent of the median income in some cities. Making a monthly mortgage payment is cheaper than a monthly rent payment in all but two of the 35 largest U.S. metros(iv), but first renters need to save enough money for a down payment.

The Zillow Housing Aspirations Report, a semi-annual survey sponsored by Zillow and conducted by IPSOS, asks 10,000 renters and homeowners in 20 metros across the country about their views on homeownership and their personal housing expectations going forward.

Here are some highlights from the report:

  • Over half (63 percent) of renters are confident that they will be able to afford a home someday, with 25 percent planning on buying in the next three to five years.
  • Millennial renters are more confident than any other generation that they will be able to afford a home someday, with 34 percent planning on buying in three to five years. Almost a quarter (22 percent) said they plan to buy in one to two years and 2 percent of millennial renters said they never plan on buying a home.
  • The majority of respondents (66 percent) believe owning a home is necessary to live The American Dream, and 72 percent believe owning a home increases your standing in the local community — millennials believe these two statements more than any other generation.

With home values across the country at their highest point since June 2007, cobbling together a 20-percent down payment on a home costs more than two-thirds of the U.S. median household annual income(v). In pricier markets like San Jose and Los Angeles, buyers must come up with more than 180 percent of the median annual income, making a home purchase out of reach for many aspiring homeowners.

“With home values close to record highs, it’s no surprise renters are concerned about coming up with enough money to buy a home,” said Zillow Chief Economist Dr. Svenja Gudell. “Rising rents are also a factor — it’s extremely difficult to save when you’re paying record-high rents. While it is possible to put down as little as 3 percent on a home, the trade-off is a higher interest rate and costly private mortgage insurance, a financial tradeoff that may make sense for some buyers. But with interest rates rising in 2017, it’s important to remember that a lower interest rate can save buyers thousands of dollars over the life of their loan. For those trying to save for a down payment, it’s important to set realistic goals and realize it may take a few years. Also, consider working with a reputable financial advisor to help set a budget that works for you.”

San Jose, San Diego and Los Angeles had the greatest share of renters say affording the down payment is the number one barrier to owning, at over 72 percent. Women (72 percent) were more likely than men (62 percent) to select the down payment as the top barrier to homeownership.

One-third of buyers used more than one source of funds for their down payment, including gifts and loans from family, according to the Zillow Group Report on Consumer Housing Trends(vi). Over half of buyers saved by setting aside a little money at a time.

Mortgage rates on Zillow ended the month of March at 3.94 percent, down from a high of 4.13 percent in the middle of the month(vii). Home shoppers can use the Zillow Affordability Calculator to see how varying loan amounts and down payments will impact monthly payments and the lifetime balance of their mortgage.

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About Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc. Housing Aspirations Report is a trademark of Zillow, Inc.

IPSOS is a registered trademark of IPSOS S.A.

(i) In the U.S., the monthly median mortgage payment takes 15.8 percent of the median monthly income while the monthly median rent payment takes 29.2 percent of the median monthly income.

(ii) The Zillow Housing Aspirations Report is computed from an IPSOS poll which combines sample of 10,000 U.S. adults from 20 U.S. core-based statistical area (CBSA) metropolitans (Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Las Vegas, Miami, Minneapolis, New York, Philadelphia, Phoenix, St. Louis, San Diego, San Francisco, San Jose, Seattle, Tampa, and Washington, D.C.) age 18+, surveyed online in English. The survey has a credibility interval of plus or minus 1.1 percentage points for all respondents from the 20 U.S. metropolitans and approximately 5.0 percentage points for an individual U.S. metropolitan. Post-hoc weights were made to the population characteristics on gender, age, region, and race and ethnicity. This version of the survey was conducted March 1st – 15th, 2017. For more information about conducting research intended for public release or Ipsos’ online polling methodology, please visit the Public Opinion Polling and Communication page.

(iii) Renters surveyed said coming up with a down payment is a greater barrier than qualifying for a mortgage, debt, job security, not being in a position to settle down and low inventory of homes.

(iv) San Jose and Miami are the only metros among the largest 35 U.S. metros where a mortgage payment takes up more income than a rental payment.

(v) Zillow release on down payment costs here.

(vi) The first annual Zillow Group Report is the largest-ever survey of U.S. home buyers, sellers, owners and renters, and asked more than 13,000 U.S. residents aged 18 to 75 about their homes – how they search for them, pay for them, maintain and improve them, and what frustrations and aspirations color their decisions.

(vii) Rates for a 30-year fixed mortgage. High of 4.13 percent was hit on March 14, 2017.

A Down Payment Costs Home Buyers an Average of 2/3 of Annual Income

Saving for a down payment is the most pressing concern of one in five home-buyers; here’s where a 20 percent down payment hurts the most.

Seattle, WA – Jan. 13, 2017 (PRNewswire) Cobbling together a 20 percent down payment on a home costs more than two thirds of the average annual income – one of the reasons potential home buyers say saving for a down payment is among their top concerns.

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In the U.S., to buy a median-priced home for $192,500, a buyer must scrape together $38,500 in cash – plus any closing costs and moving expenses – in order to ensure they qualify and get the best terms on their mortgage.

Among large housing markets, buyers in the San Jose, San Francisco and Los Angeles metros must come up with the largest percentage of their income to buy a home – 182 percent of the average annual income to put 20 percent down on the median home.

In San Jose, where the median income is $105,455, a down payment on the median $961,600 home is $192,320.

Buyers in Pittsburgh, Indianapolis, and Kansas City set aside the smallest chunk of their income for the ideal down payment: 48 percent of the median annual wage.

Should mortgage interest rates rise in 2017 as expected, a solid down payment will become increasingly important. While it is possible to put down as little as 3.5 percent on a home, the trade-off is a higher interest rate and costly private mortgage insurance. A better interest rate can translate to thousands of dollars over time; on a $200,000 loan, lowering the interest rate by half a percentage point will save $20,000 over the lifetime of the loani.

“Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” said Zillow Chief Marketing Officer Jeremy Wacksman. “While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”

Nearly half of all home buyers are buying a home for the first time, according to the Zillow Group Report on Consumer Housing Trendsii. Those buyers can’t rely on the equity in their current home and must come up with the cash to get into the housing market – often while paying record-high rents. First time home buyers are also more likely to have received a financial gift to help with their down payment.

One in five home searchers said saving for a down payment is their top concern about the home-buying process – second only to finding an affordable home, which was their top concerniii. Most – 56 percent – saved for their down payment the old-fashioned way, setting aside a little money at a time, according to the Zillow Group Report.

One third of buyers used more than one source of funds for their down payment, combining savings with gifts and loans from family and friends or cashing in their retirement.

Home shoppers can use the Zillow® Affordability Calculator to see how varying loan amounts and down payments will impact monthly payments and the lifetime balance of their mortgage.

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Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

(i) Average savings comparing a $200,000 30-year fixed loan at 3.5% and 4.0%, assuming a 20% down payment.

(ii) The first annual Zillow Group Report is the largest-ever survey of U.S. home buyers, sellers, owners and renters, and asked more than 13,000 U.S. residents aged 18 to 75 about their homes – how they search for them, pay for them, maintain and improve them, and what frustrations and aspirations color their decisions.

(iii) This survey was conducted from Nov. 30, 2015 through Dec 2, 2015 of 1,010 adults by ORC International on behalf of Zillow, Inc.

(iv) Income data is sourced from the U.S. Census Bureau, Moody’s and the Bureau of Labor Statistics

A 20 Percent Down Payment is Not Necessary for Home-Buying Success in Today’s Easing Market, According to Redfin Agents

Redfin Agents Offer Advice to Millennials, Who are Poised to Take the First Steps Toward Homeownership

Seattle, WA – September 29, 2016 (BUSINESS WIRE) Homebuyers may need less cash savings than they think to get their offer accepted, according to Redfin (www.redfin.com), the next-generation real estate brokerage. In a survey of more than 750 Redfin real estate agents across the country conducted earlier this month, more than half said the typical down payment for successful buyers in their market was less than 20 percent. One in four said a down payment between 3 and 5 percent was typical among successful buyers. Success with a low down payment is possible even in highly competitive markets. Twenty-two percent of Redfin agents in California–a state notorious for bidding wars and high prices–said their clients were successful with 3 to 5 percent down.

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“The conditions that challenged first-time and millennial homebuyers this spring are starting to ease,” said Redfin chief economist Nela Richardson. “There are fewer bidding wars and less of a need to escalate significantly above the list price to get an offer accepted. The pace of the market is also slowing, which helps buyers since they can now afford to be patient. Sellers are getting used to the idea that all-cash buyers and investors have given way to traditional buyers who need financing to purchase a home. They are demanding less from buyers than they were just a few months ago, which means a wider spectrum of buyers and down payments can be successful now.”

When asked what types of advice they gave their clients in the past year, 74 percent of Redfin agents said they had advised buyers to get a fully pre-approved and underwritten loan agreement from their lender prior to making an offer.

“One major piece of advice I always give to sellers is that the highest offer is not necessarily the best,” said Roddy de la Garza, a Redfin real estate agent in Los Angeles. “You have to look at the whole package. If a buyer has a low down payment but comes in with a fully pre-approved and underwritten loan, that’s just as good as cash.”

De la Garza was among the 61 percent of respondents who said they had advised sellers that the highest offer is not necessarily the best.

Redfin agents also advised millennials on taking the first steps toward homeownership:

“Talk to a lender now and become educated on all of your options, even if you don’t think you’re able to buy,” said Tracy Salisbury, a Redfin real estate agent in Seattle. “You might be surprised at the possibilities.”

To read the full report, complete with more advice for millennial homebuyers, please visit the following link: www.redfin.com.

About the Survey:

Redfin’s survey was conducted between Sept. 15 and Sept. 18, and includes responses from 762 real estate agents in 38 states and Washington, D.C.

About Redfin Corporation:

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the customer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the most accurate home-value estimate online, the Redfin Estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $31 billion in home sales to date, and saved customers more than $335 million in fees, and counting.

Contacts:

Redfin Journalist Services:
Jeffery Marino, 206-588-6863
press@redfin.com

Down Payments Fall Slightly In Q1 2016

Charlotte, NC – April 28, 2016 (PRNewswire) According to the latest national down payment report released today by LendingTree®, a leading online loan marketplace, average down payment percentages for conventional 30-year fixed rate purchase mortgage offers fell slightly in the first quarter to an average of 16.64 percent, down from 17.46 percent in the prior quarter and 16.98 percent from the same period last year. The average down payment amount also fell quarter-over-quarter from $51,721 to an average $49,839, but increased year-over-year from $44,007.

The average down payment for all purchase mortgages, including FHA, VA, non-prime, and jumbo mortgages in the first quarter was $44,058, or 12.18 percent of the home’s purchase price.

Lending Tree

“Despite seasonality, home sales improved year-over-year and while low inventories fueled price growth in many markets,” said Doug Lebda, founder and CEO of LendingTree. “According to the National Association of Realtors, pending home sales rebounded in February, and existing home sales surged in March. This momentum suggests a strong spring home-buying season given low mortgage rates, improved housing inventory levels and growing consumer confidence.”

The average down payment on an FHA mortgage in the first quarter was 8.74 percent, or $16,998, representing a slight increase from Q1 2015. The average down payment on a jumbo mortgage was 23.89 percent, or $194,950 in Q1 2016.

LendingTree has ranked each state according to the conventional average down payment percentages offered to LendingTree customers from lowest to highest. The complete listing can be found on LendingTree’s press room.

The ten states with the lowest average down payment percentage for a 30-year fixed rate conventional loan are:

Table 1

The ten states with the highest average down payment percentage for a 30-year fixed rate conventional loan offers are:

Table 2

Additionally, LendingTree ranked 100 major US cities by down payment percentages from lowest to highest. The top and bottom ten are as follows:

Table 3

Table 4

About LendingTree:

LendingTree (NASDAQ: TREE) is the nation’s leading online loan marketplace, empowering consumers as they comparison-shop across a full suite of loan and credit-based offerings. LendingTree provides an online marketplace which connects consumers with multiple lenders that compete for their business, as well as an array of online tools and information to help consumers find the best loan. Since inception, LendingTree has facilitated more than 55 million loan requests. LendingTree provides free monthly credit scores through My LendingTree and access to its network of over 350 lenders offering home loans, personal loans, credit cards, student loans, business loans, home equity loans/lines of credit, auto loans and more. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree.

Media Contact:

Megan Greuling
Megan.Greuling@LendingTree.com
(704) 943-8208