Good News for First Time HomeBuyers

First time homebuyers are purchasing homes at an increasing rate.  A Zillow online survey found that 47% of purchases in the past year went to first time homebuyers…now, it was an online survey, and first time homebuyers are a little more technologically savvy when it comes to anything online, so the results may be skewed a bit in favor of the younger generation – ie. the first time homebuyers.  By contrast, the National Association of Realtors conducted a snail mail survey and found that the first time homebuyer number is closer to 32%.  Purely based on my own observations, I would lean towards the NAR snail mail survey at 32% versus the 47% Zillow came up with.  Either way, the reality is still the same:  Percentage of sales to first time homebuyers is increasing, and is expected to continue increasing over the next year. 

This is great news.  As the financial crises gets smaller and smaller in the rearview mirror, lending guidelines have become a little more favorable for first time homebuyers.  In late 2015 Fannie Mae announced that it will decrease the minimum down payment required on their high balance loans from 10% to 5% (ie. Loans between $417,000 and $540,500 in King and Snohomish counties now only require 5% down versus the previous requirement of 10% down).  Moreover, they also removed the requirement that 5% of the down payment be from the borrowers own funds, if purchasing a 1 unit home – the entire down payment can now entirely be gifted.  These two small moves opened the door to A LOT of first time homebuyers in our region, and it’s good to see millennials taking advantage. 

By continuing to relax lending guidelines, Fannie Mae and Freddie Mac are opening the door to more and more buyers, which in turn continues to support the Puget Sound housing market…and all other housing markets nationwide for that matter.  Greater Demand à Decreasing Supply = Rising Housing Prices. 

To read the full article, please visit:  http://www.seattletimes.com/business/real-estate/survey-more-first-timers-than-expected-are-now-buying-homes/

Happy Investing! 

Today's blog courtesy of Kyle Bergquist, Guild Mortgage

Ready to Buy?

Q: I am so tired of renting! What do I need to do to prepare for buying my first home?

A: Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income. Talk with one or more mortgage lenders about the loan amount for which you might qualify. Interview at least a couple of lenders.

Develop a wish list of what you'd like your home to have. We have a form that you may use to do this. Then prioritize the features on your list.

Select three or four neighborhoods you'd like. Consider items such as schools, shopping facilities, area travel routes. walkability, public transportation and safety.

Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, escrow fees and title reports, average between 2-4 percent of the home price.

Get your credit in order. Obtain a copy of your credit report. Free copies are available annually from freecreditreport.com

Determine how large a mortgage you can handle. Also explore different loan options and decide what's best for you.

Organize all the documentation a lender will need to preapprove you for a loan. The lender will provide a checklist of information they need.

Do  research to determine if you qualify for any special mortgage or down payment assistance programs. There are many first-time homebuyer, owner-occupied, and special interest options available for which you may be eligible. Ask during your lender interviews to see which ones they know.

Calculate the costs of homeownership, including property taxes, insurance, maintenance and association fees, if applicable.

And when you are ready to buy a Seattle home, send Wendy Ceccherelli a private message at HomeLandInvestment@gmail.com or call 888-621-4999.

Happy Investing!