As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing
3 Creative Ways To Realize The American Dream Of Homeownership
Homeownership is still the American dream. It’s been reported that 7 out of 10 renters said they would rather own a home than pay rent. But the reality of affordable homeownership remains a dream for millennials due to the Recession and sluggish wages in recent years. Necessity is the mother of invention, however, and people are getting creative when it comes to fulfilling their dream of homeownership. Here are 3 creative ways to realize the American dream of homeownership:
1. Homeownership through co-buying
Baby boomers are growing older. They want to downsize, move closer to their children or grandchildren. They’re ready to sell and finally in a position to do so.
Millennials don’t have much in savings and/or have a lot of student loan debt. The Recession has been difficult for them to work through and get past.
Single friends and single siblings don’t want to foot the cost of living alone or deal with the feeling of lonesomeness.
Enter: the creative way of co-buying.
There is a demand for new construction with more flexible living arrangements. Instead of living separately in different areas, baby boomers, millennials and singles are buying homes with floorplans that have an in-law suite or two master suites. Then,
Homeowner parents allow their adult children to move in and pay rent, or
Each adult resident is put on the mortgage if they have good credit or if the homeowner (aka: the parent) needs the income to qualify for a home loan. (By the way, when there are several borrowers, lenders use the credit score of the borrower with the lowest credit. These kinds of provisions involving several buyers are not rare), or
Friends or siblings live together to age together and have each other to rely on.
Moving to a less expensive area
Housing markets across the country are recovering making prices shoot upward. RealtyTrac reported that the median sale price of U.S. single-family homes and condos in October, 2014 had reached its highest level since September, 2008. For example, the median home value in San Francisco and Los Angeles, California, more than doubles the median home value in Fresno. As an alternative to higher living costs and making homeownership a possible reality, people move to the less expensive area of Fresno. Communities in Texas, Arizona and Utah have lower housing prices and are seeing huge growth as people seek to cut housing costs.
You shouldn’t choose a neighborhood based on price alone though. It isn't wise. Get to know the area and what you are getting into. Find out as much as you can about a neighborhood: schools, growth potential, crime rates and industries.
3. Obtaining assistance with the down payment for homeownership
Federal Housing Administration loans (FHA loans) allow buyers to qualify for a mortgage with as little as 3.5 percent down. Freddie Mac and Fannie Mae offer buyers a low-down payment mortgage program as low as 3 percent down. But FHA, Freddie or Fannie do not have large loans available for homes in a pricey market.
If you happen to desire a home in a pricey market, you might want to look at the REX HomeBuyer program. REX is not a mortgage lender, and the buyer must come up with half of the down payment.
REX is a program for those buying in a pricey market who need a large down payment to keep monthly payments within reach. It offers assistance with the down payment for a share in your home’s appreciated or depreciated value when you sell your home. When you partner with REX, the initial investment is cut from borrowing 90 percent down to borrowing only 80 percent of the home’s price. A down payment larger than 20 percent will help you avoid the cost of private mortgage insurance (PMI). You still need to show satisfactory credit and income in order to borrow the remaining 80 percent. REX provides a 10 percent down payment to match your 10 percent, but a larger portion of your home’s appreciated value will be shared by REX when you sell your home or buy out of the program. You are paying back the agreement with future appreciation in your home instead of debt service.
Sam Lepore of Long and Foster Real Estate will learn as much as he can about you: your lifestyle, activities, wants and needs in a home and in an area, to find the area that’s right for you and your housing needs. He knows about mortgages and what's available to you in order to make your dream of homeownership happen for you. Call him today!(856) 297-6827is the number to call or you can email@example.com
Sam Lepore is a Realtor with Keller Williams in Moorestown, NJ. Call him today at 856.297.6827 ....