What stops first time home buyers from buying homes? There are a few obstacles which a first time home buyer can easily overcome. This article will help first time home buyers get their down payments.
Many first time home buyers still desire to own their own home. What’s stopping young people from buying homes is the result of several drawbacks. Since the market crashed, the banks are scrutinizing every loan. They are finding it hard to make ends meet and cannot save up for a down payment. However, these younger buyers have a symbiotic relationship with existing homeowners because these first time home buyers allow homeowners to sell their homes and buy a more prominent home.
Historically, about 40 percent of home buyers are first-timers. In today’s market that number has fallen to 33 percent, a three-decade low point, according to the 2014 Profile of Home Buyers and Sellers report done by the National Association of Realtors.
NAR Chief Economist, Lawrence Yun explains that “rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce.” Additionally, he says, “…adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”
Where Can First-Time Home Buyers Get Their Down Payments?
First-time homebuyers can use a variety of resources for their loan down payments:
- 81% tap into their savings or borrow from their retirement fund.
- 26% receive a gift from a friend or relative – most likely their parents.
- 10% sold stocks or bonds or tap into a 401(k) fund.
- 6% receive a loan from a relative other than parents or a friend.
However, the banks have lending rules about buying with a down payment funded by a gift or loan. If you’re getting help to buy a home or you want to help a relative buy a home, contact me @ (516) 795-1000 and I’ll walk you through the best way to handle this issue.
Source: NAR Profile of Home Buyers and Sellers