A Guest Blog Written by Security America Mortgage*
Reports from map dots across the United States indicate that the country’s shrinking inventory of available houses is unlikely to change in the very near future. Supply and demand being what it is, this trend points to two unfortunate truths for consumers: 1) find a home you love in the neighborhood you desire may be a more arduous process than you anticipated, and 2) if you do find that dream combination–or even if you have to settle on something outside your original search parameters—it may come with a price tag that stretches your budget further than you hoped.
A December report from the National Association of Realtors showed the number of homes on the market had decreased for seven months in a row, coupled with a 7.8 percent increase in prices for the year.
How potential homebuyers can overcome the challenges
Every homebuyer has a few non-negotiables. Maximum commute time, number of bedrooms and bathrooms, and school districts…those requirements tend to be pretty concrete. But often, and particularly when the proverbial pickings are rather slim, some of the property/house characteristics and financial details may be more preferences than requirements in the end. That flexibility opens doors.
As a realtor or a lender, you can broaden potential buyers’ horizons by educating them in some of the tricks (the kind with integrity) of the trade regarding home upgrades, renovation, and loan options. In a seller’s market, you can be the person who sets a buyer’s mind at ease by effectively expanding their choices and relieving (some) budget stress.
Renovate what doesn’t work: If a potential home buyer has carpentry/handyman skills, or even knows people who do, they could save money and time by purchasing a house that may be lacking in some of their wants, then making the upgrades/changes on their own.
FHA Renovation Loan, standard or limited. For the buyer who wants to hit the ground running on upgrades or renovations, packaging the renovation costs with the mortgage may be ideal, keeping in mind that eligible remodels include things attached to the home (i.e. not landscaping or hardscaping) and exclude luxury items like pools and patios.
USDA Loans: For buyers looking at, or willing to look at property that qualifies as “rural” (this may include areas where residential growth is still relatively new), they could be eligible for 100% financing on a home.
Good Neighbor Next Door Program: If a buyer has a career in law enforcement, firefighting, EMT, or teaching, they could get a hefty discount IF location isn’t a prime concern. The goal, other than offering a price cut for people in public service, is to revitalize neighborhoods.
VA Loans: Veterans of the U.S. military may be eligible for lower down payment options with competitive interest rates through the VA Home Loan program, which can be used for an existing home OR new construction.
Build using a construction loan: Now, here’s the truth, one you likely know and that we believe consumers should know, too. In today’s market, constructing a home may not be any more affordable than buying an existing home. BUT, if the biggest challenge is not budget, but is availability of the right house in the right location, offering a Construction-to-Permanent One-Time-Close home loan may be the solution. A home or construction loan is always going to cause some amount of stress for a buyer, but the less complicated it is, the fewer steps required, the more comfortable the loan recipient will be.
The housing climate may be making buyers sweat, but the number of financing options lenders can offer adds just the flexibility and assurance that can get them across the finish line.
About the author:
Based out of Houston, Texas, Security America Mortgage is a full-service mortgage lender with a heart for our military veterans. The team at Security America is experienced in home loans of all sizes and types but is most honored to serve in their role as Certified VA Lenders.
*This article was written by Security America Mortgage, NMLS 355253 www.nmlsconsumeraccess.org. American Financial Resources (AFR) is not affiliated with Security American Mortgage, a third party, independent company. The views and opinions expressed in the blog are those of the authors and do not necessarily reflect the official policy of American Financial Resources.