Concerns Facing First Time Home Buyers Right Now
Buying a home right now is attractive to many people looking to purchase their first home. Interest rates are relatively low and with the growing number of foreclosures many homes that were once far too costly are now affordable. Though these are benefits to the average consumer there are serious issues facing first time homebuyers in the current real estate climate.
Down payments are one of the biggest challenges. Before the market tanked a potential owner could get by with putting down as little as 1 percent of the purchase price of the home but this changed drastically after the collapse. Now banks and lenders are much more stringent with their mortgage rules and most first-time homebuyers are now faced with coming up with 10 to 20 percent of the purchase price.
This is quite a challenge for most consumers where the average salary is – and a home that costs an average of 200,000. That's a possible 20 to 40 thousand dollars that the consumer has to come up with. That's a lot of money but there are ways around this. If a buyer takes out a mortgage loan insured by the Federal Housing Administration will only be required to come up with a down payment of 3 to 5 percent of the purchase price, which in this case would average to about 7 thousand.
One of the biggest things hurting the housing market today is actually the lack of first time homebuyers. Even though there are many incentives for those families and individuals looking to investing in a new home, USA Today reported that last month 34 percent of home purchases were made by first time homebuyers.
This has improved somewhat compared to January's 29 percent but the National Association of Realtors (NAR) reports that in a healthy market this figure should be somewhere around 40 to 45 percent of market purchases. First time home buyers are a critical part of the housing market and in an economy resting on such shaky ground, many potential homebuyers are content to sit on the sidelines and see how things pan out. Often keeping their belongings in storage facilities like Storage Mart and renting property or living with family until things get better. They may have a long wait ahead of them.
Buying a home for the first time is a challenging task and many first-time buyers don't know enough about real estate and mortgage issues. Having the necessarily funding for a down payment and knowing the right programs and mortgages to apply for is essential if people want to intelligently and efficiently use their money to better effect in a market still showing signs of instability. Understanding the climate and terms is a huge first step and overcoming some of the hurdles standing in the way of novice homebuyers today.