Tag Archives: First time buyer

More First-Timers May Enter the Highlands Housing Market

1-14-16-firsttimehomebuyerYou don’t need real estate statistics or government bureau reports to sense that first-time home ownership rates have been in the dumps for a while. Highlands housing figures have too few transactions month-by-month to draw many conclusions about sustained trends in home ownership here—yet it’s evident that for young adults everywhere, the glacial recovery in the economy combined with factors like student debt have made it particularly difficult for most of them to move from renting to owning a Highlands home.

Despite the new year’s opening burst of worrisome economic headlines, nationally, when it comes to house ownership trends, there seem to be spots of good news. One with that focus came out of Fannie Mae at year’s end, courtesy of their Housing Insights publication. It wasn’t exactly a barn-burner. The excitement level, on a scale of 1 to 10, would have weighed in at maybe a 2. But for young adults who find their personal financial outlook is a square peg when it comes to the round hole of buying a first Highlands home, any improvement in the outlook would be progress.

That this particular improvement was less than breathtakingly good news was signaled by the headline. It came in the form of a question: “Could the Long Decline in Young-Adult Homeownership Be Nearing an End?” Fannie asked (possibly hoping the readers would supply more information). The reason for the indecision was clarified in the article’s Summary, which stated that the researchers had prepared several projection scenarios for young-adult housing ownership. These showed that ‘strong underlying population growth trends’ demonstrate how even small improvements in those trends “could generate increases in young owner-occupants in coming years.”

In other words, if there are more young adults, there might be more young adult homeowners. Not stated was how long it took the Sherlocks on the research staff to come up with that finding.

In case this sounds silly, it’s actually not quite that bad. During the worst years of the housing bust, the number of young homeowners decreased despite the fact that their proportion of the population grew…so the projection might indicate an end to that negative momentum. That decline has in fact slowed gradually…but in the three projections made by the Census Bureau, one shows continued decline, the next a slight increase, and the third, a robust increase (twice that registered during the housing boom). For the big question: which of the three is most likely to occur, the answer is (wait for it):

“It’s difficult to predict…but stability or modest improvement in homeownership is certainly plausible.”

That might have raised the excitement level to about 3—especially here, where the Highlands housing picture does in fact include properties that are great fits for first time homeowners. With home loan interest rates still enabling extremely doable monthly mortgage payment numbers, even some of those young adults who think their financial square pegs can’t fit the homeownership round hole might learn otherwise. The way to find out? Call me!

Low Credit Scores Don’t Always Nix First Time Home Buyers

5-13-creditThey really ought to teach this stuff in school: real-life, day-to-day economics. Highlands youngsters out on their own for the first time are usually left to trial and error when it comes to mastering things like how to lay out a personal budget or use credit advantageously. Or even how to go about selecting a bank, or opening a checking account…

So when it comes to buying their first Highlands home, it’s very common for newcomers to put off confronting the whole daunting issue. When you’re still new to your career, tackling a purchase involving years’ worth of income channeled through a maze of unfamiliar procedures is easy to put off. But when the delay stretches well past the point in their financial lives when it would be clearly advantageous to own rather than to continue renting, it’s the same thing as throwing hard-earned cash overboard.

Since the asking price for even the most modest Highlands home is a number with multiple zeros on the end, you might assume that common sense indicates it’s out of reach. All the more so if early mistakes handling credit cards or student loan troubles have damaged your credit score. The good news is that potential home buyers with less than outstanding credit can still buy that first home—given some careful financial planning and research on your part.

They really ought to teach this stuff in school! That having been said, here is a broad-brush, very basic rundown of the lay of the land aimed at first time Highlands home buyers:

  • The most important factor banks use to determine your mortgage eligibility is your FICO (Fair Isaac Corporation) credit score. The numbers range from 300 to 850, are based on a number of factors including how much debt you have and your payment history. In general, borrowers will need a credit score of at least 650 to qualify for a conventional home mortgage loan.
  • BUT, it’s not the only factor. Although your credit score tops the list of elements that determine your eligibility for a mortgage, banks will also consider the amount of money you can commit to a down payment. Saving up may delay your first home purchase, and definitely takes discipline…but today, the amount you need is changing. Different lending institutions have different rules for determining eligibility, and some offer-
  • Non-conventional loans. Today, first-time home buyers with relatively low credit scores can often secure such loans. You should research Highlands banks to find those currently offering non-conventional loans to borrowers with qualifying credit histories. You should also consider a Federal Housing Authority (FHA) loan, which eases credit requirements. For example, you might qualify for an FHA loan with a credit score as low as 580 with a down payment of just 3.5%!
  • You can also use money from an IRA for your down payment. In other circumstances, withdrawing money from your IRA before age 59 ½ means paying a 10% penalty, but that rule doesn’t apply when you use your IRA to purchase a first home!Bottom line: a low credit score doesn’t necessarily mean you can’t buy your first Highlands home. I’m here not only to help you find a home, but to help clarify the options that make possible that dream of owning your first home. Call me anytime!

Obvious (and Less Obvious) First House Buying Tips

12-3-firsthomeFor Lake Toxaway renters who are beginning to investigate the possibility of buying a first house, the prospect can look like more than just a steep hill to climb—it can look more like a cliff! Just last month, the Daily Real Estate News cited recent research that indicates in most places (512 counties surveyed, in fact) it can take the average family more than twelve years to save up for a 20% down payment. When you consider the significant financial advantage that a first house brings its Lake Toxaway owner, the situation seems like a Catch-22. How can you save any faster when that big tax advantage goes only to the existing homeowners?

If a decade-plus wait sounds unreasonable, there’s a lot you can do to trim the delay—

1) (Obvious) Cut excess spending

If you take notes for a month or so about how you really spend your money, you find that the little things really add up: morning coffee, daily lunches, planned and unplanned shopping expeditions all put serious dents in your wallet. Spot the expenditures, you can cut back on, then reduce or eliminate them as soon as possible.

2) (Less Obvious) Create a ‘First House’ account

Create a separate savings account with the single purpose of holding your first house down payment. Watching it grow month by month will more than make up for the inconveniences caused by scrimping on daily and other spending.

3) (Way Less Obvious) Pick up extra work

You may never have considered it, but sometimes moonlighting is a great way to add additional income that quickly build your First House account. If you have a hobby that lends itself to web sales, think of starting a store on sites like Etsy or Amazon.

4) Reduce your current bills

There are those bills that you can’t quite get rid of — cell phone, credit cards and other bills don’t just go away because you’re saving for a new Lake Toxaway house. For some bills, though, there are options for slimming down your monthly payments. Try negotiating a lower APR or reducing your phone or cable plan.

5) Make (and stick to) a budget

Those notes you made up there on 1) can be the raw material for making a detailed budget that separates necessary expenditures from extras like gifts, trips and special nights out. Find creative ways to entertain yourself and get together with your friends. Hosting movie nights, finding free concerts, and moving cocktail hour to home are all surprisingly doable.

6) Downsize

It may seem counterintuitive: why would you decrease the size of your current digs? If you can temporarily scale back, the lowered rent can materially boost your savings. If it’s at all practical, living with relatives might move the process along even more quickly!

The kind of scaling back that builds for a local first house down payment is a lot more fun if you can see quick progress. And the possibility of qualifying for a smaller than 20% down payment is also currently increasing. Give me a call for a realistic discussion of your own Lake Toxaway first house purchase!