By Jaymi Naciri
Still unsure whether or not you should buy a house? It’s a big commitment, not just from a financial standpoint. But the rewards generally far outweigh any potential downsides for those who take the plunge. Need more convincing? How about the fact that:
You’re already paying a mortgage
That money that comes out of your account every month? It’s going right into someone else’s account. Doesn’t that make you just a little bit mad?
To be clear, someone else is making money off you!
How about now, when you think about the fact that real estate continues to appreciate and you’re not getting to appreciate that appreciation.
“The national median existing single-family home price in the first quarter was $232,100, which is up 6.9 percent from the first quarter of 2016 ($217,200), the fastest growth since the second quarter of 2015 (8.2 percent),” said the National Association of REALTORS (NAR). Aren’t you tired of watching someone else make money while you sit in the place they own and try to figure out how to get ahead?
You need to express yourself
Not being able to put a coat of paint on the walls or hang some wallpaper or enjoy the countertops, cabinets, or flooring you picked out because your landlord won’t let you make any changes is not cool. There are some temporary solutions to make your place look better, but nothing compares to having the freedom to do what you want, when you want.
It doesn’t cost as much as you think it does
In fact, you may be paying more in rent now than you would be for a house payment. A new NerdWallet analysis “showed that a majority of millennials would prefer owning to renting, but they appear to be postponing homeownership because of real and perceived difficulties in affording it.” A report from Investor’s Business Daily shows that, “Paying a mortgage is cheaper than renting in 42 states.” Is yours one of them?
Hardly anyone pays a 20-percent down payment anymore
Were you under the impression that you had to come up with a huge stack of cash to buy a house? Federal Housing Administration (FHA) loans are among the most popular options for all homebuyers, and for first-timers, they make a lot of sense. First, because the credit requirements are less stringent than other loans – in many cases, you can have as low as a 620 score. Also, you can qualify with as low as 3.5 percent down. On a $250,000 house, that’s only $8,750.
“For home buyers, FHA mortgages require a 3.5-percent down payment with the fewest ‘strings’ attached,” said The Mortgage Reports. “This makes the FHA mortgage one of the most lenient mortgage types available nationwide. There are very few credit restrictions with the FHA loan and the agency allows your 3.5-percent down payment to come as a gift from a family member, employer, charitable organization or government home-buyer program.”
Rates are still near their lowest point ever
Yes, they’ve gone up a bit recently and are currently sitting a bit above 4 percent. But when you think about the fact that a decade ago they were over 6 percent and in the 1980s they were almost 18 percent, 4 percent looks a lot better, no?
Dogs are cool
Living in an apartment that doesn’t allow animals? That’s pretty common. Trying to find a rental with a pet policy is near impossible. If you do find one, you can usually expect to pay a hefty pet deposit and monthly pet rent.
Your student loan debt isn’t as much of a big deal as you think
Yeah, it stinks to have to be saddled with that debt just because you decided you should expand your education, get a degree, and make yourself more hirable. But jut because it’s a reality doesn’t mean you can’t improve your standing.
If you have student debt, mortgage investor Fannie May’s new rule changes “should make it easier for you to purchase a first home,” said the Chicago Tribune. The rules include a change in how student loan affects debt-to-income (DTI) ratio calculations if you had payments reduced through an “income-based repayment” plan.
“If your payments were originally supposed to be $500 a month but you’ve had them reduced to $100, only the $100 will be added to your monthly debts for DTI purposes,” they said. “Previously lenders were required to factor in 1 percent of your student loan balance as your monthly payment on the student loan, even though you were actually paying a fraction of that. As a result, many borrowers’ debt ratios were pushed beyond most lenders’ underwriting limits.”
In addition, debt ratios can also improve if you have other outstanding debts that are being paid by someone else.
“Say, your parents pay your monthly credit card balances – these no longer will be included in your DTI computation, provided the payments have been made steadily for 12 months,” they noted. “This should improve the debt ratios of young buyers who are still getting a little help on their cash flows from Mom and Dad.”
Everyone’s doing it
Are your millennial friends starting to buy houses? They’re part of a sweeping national trend.
“Get ready to see more first-time home buyer clients. In the first quarter of 2017, the number of new-owner households was double the number of new-renter households,” said the National Association of Realtors (NAR) in the most recent edition of their Realtor magazine.
There were about 854,000 new-owner households during the first three months of this year, which is more than double the 365,000 new-renter households in that period, according to U.S. Census Bureau data. What’s more, it’s the first time in a decade that new buyers outpaced new renters.
First-time buyers also account for 42 percent of homebuyers this year, up dramatically from 31 percent in 2011, which was the lowest point recorded by Fannie Mae.
Call me today for all your real estate needs. If you have been thinking about selling, now is the time! We are experiencing historically low inventory. We have many buyers just waiting for good, quality homes to become available. Visit my website at www.EQRE.com. Let my years of experience work for you!
Elaine Quigley, CBR, CRS, GRI
57 East Main Street, Suite 217
Westborough, MA 01581
Business: (508) 366-4266
Cell: (508) 735-5161