There are two major camps of prospective homes buyers that seem to be sitting on the side lines waiting to step into homeownership. And the question remains, what exactly are they waiting for?
The first camp is the buyer who has weathered the experience of a short sale or home foreclosure and believes they have to wait 4-7 years before being approved for a mortgage again. The second camp is the first-time homebuyer who wants to become a homeowner but can’t seem to come up with the 10-20% down payment that has become the standard to get into a home.
If you fall into either of these categories you should contact a lender or your real estate agent before deciding to extend your lease or enter into a new one. While we know that each buyer is unique and has their own set of circumstances, understanding current and up-to-date information will assist you in making informed decisions that may lead you onto the path to homeownership.
Here are 3 reasons why you may want to become a homeowner in 2015:
1. Rental rates are on the increase
Rents are projected to increase in 2015. If you are renting, it’s likely that your rent is equal to or more than a mortgage payment. And, according to ZILLOW, the average increase in home prices in the U.S. last year was 5%. Simply put, you could begin building equity in a home instead of writing out that monthly check to your landlord and putting money in someone else’s pocket.
2. For 2015, there are mortgage programs with as little as 3% down
First time home buyers say the major obstacle to getting into a home is the down payment. The Federal Reserve found that 45% of renters delayed buying a home simply because they couldn't afford a down payment. We have great news -- the 10-20% down payment is a thing of the past as long as you have good credit and a job. Fannie Mae and Freddie Mac have created programs with as low as 3% down. Be sure to speak with your lender to find out more information about these new programs for 2015.
3. Lenders have eased the restrictions and waiting periods after a short-sale or foreclosure
There are prospective buyers out there that think they still have to wait to get approved for a mortgage due to their negative credit surrounding a short sale or home foreclosure. The good news here is a lot of lenders have changed the waiting periods and eased the restrictions. While you will have to have a considerable down payment, you might be surprised that your waiting period is over and a lender will work with you in getting you back into a home.
The bottom line? With higher rents, easier mortgage qualification standards and lower interest rates, it may now be the right time for many buyers to jump off the fence and buy a home.