Thursday, June 5, 2014

It's not always easy for first time home buyers

Lately first time home buyers have had to deal with a lot of issues trying to get into their first home. First of all the job market has not been very good for recent college graduates and when you combine that with the fact that most former students have large loan debts to pay off buying a home may not be on their immediate to do list. It’s not unusual today for young folks finding themselves living back home again or at the very least sharing an apartment with several roommates just to pay the bills.

Although interest rates have been lower many lenders have tightened the standards required to obtain a home loan and that has presented yet another challenge for those seeking to buy their first home. As if all this wasn’t enough, short sales and foreclosures were being quickly bought up by savvy investors who were often paying cash for the distressed properties (as high as 50% by some estimates). This further limited the options for 1st time home buyers and even then offering a substantial down payment for a short sale is often the key to having your offer approved by the bank; something that most recent grads. simply cannot afford to do.

Due to below average housing starts homebuilders have been building fewer homes than in the past. The current average is about 1.1 million per year but the national average is usually around 1.5 million. That’s a big difference and the effect on the economy is noticeable.

Currently the federal government is considering different ways to help these first time homebuyers find a solution. One current proposal is to offer a discount on the mortgage insurance premium if the first time home buyer agrees to take part in a housing counseling program. While this sounds like a good idea it is my opinion that there is no substitute for gainful employment and a decent salary that allows one to qualify for a home mortgage. The housing market has always been one of the major indicators of the general health of the economy but it is my opinion that no amount of special programs or incentives will ever replace the basic need to be employed.

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