WILL PEOPLE OF AVERAGE MEANS GET ANOTHER CHANCE TO CLIMB
THE PROPERTY LADDER?
By, Cassie Bouldin
Springfield, NJ (March 28, 2007) – Forget buyers beware.
It’s time for first-time homebuyers of modest means to get
in gear. Last year ended with a sharp decline in first-time
homebuyers. According to the National Association of Realtors,
there was a 40% drop in first-time homeownership in 2006 and
the decline was partially attributed to increased housing
prices in the wake of the housing boom.
“Now we’re seeing changes in the housing market which
have investors going wild and hopefully first-time homebuyers
will catch on,” says Robert L. Moffa, a sales manager for
First Atlantic Mortgage Services, 871 Mountain Ave.,
Springfield, NJ 07081,
The changes? Housing prices are falling, rents are rising,
and lenders are growing weary.
Long before the housing boom, mortgage lenders used a 36%
debt ratio as a guideline for approving loans. However that
debt ratio is up to 50 or 60% right now, making it much easier
for consumers of modest means to purchase a home.
“During the course of this year I think debt ratio
requirements will drop back down to 36%,” says Moffa about
the rise and fall of the lending rate. “Meaning investors
will still be able to buy, but people of modest means will
miss out on the lower housing prices.”
The outlook isn’t pretty for loan requirements. Personal
debt is at an all time high and the number of people
purchasing homes without a down payment is also at a record
level.
“The floodgates are opening on thousands of foreclosures
and sub-prime lenders are going under,” says Moffa who helps
secure between 3 and 4 million in loans each month. “This
means lenders have no choice but to tighten up.”
Currently, people with pre-approved loans have bargaining
power in this buyer’s market. In some cases developers are
hungry for cash and are willing to liquidate new construction
at little more then cost to pre-approved buyers. In addition,
many homes are hitting the auction block with no minimum bid
due to the failure of subprime lenders.
“It’s unfortunate but those of modest means could be
left dreaming of homeownership if they can’t scratch up the
money to buy while prices are down,” says Moffa about
projections from the National Association of Realtors that the
median existing-home price is expected to rise 1.2% to
$224,500 this year.
To contact Robert Moffa at First Atlantic Mortgage, 871
Mountain Ave., Springfield, NJ 07081 for more information,
call him at 973-467-0022 or email him via the website www.famtgs.com.
Reasons to Become a First-Time Homebuyer
- It’s a buyers market.
- Mortgage requirements are expected to become more
stringent over the course of the year.
- Rent prices are on the rise, partially because consumers
who are foreclosed upon can’t obtain another home loan
and are forced to rent.
- Rental safety deposits will rise if foreclosures flood
the market with high-risk renters.
- Housing values will increase as the market improves.
Q: Can first-time homebuyers purchase a
foreclosure?
A: Yes. Don't expect a "dream home" and
you won't be disappointed.
Advantages: the price is usually lower, the seller is
motivated, and the home is empty and ready for immediate
occupancy.
Disadvantages: it’s possible the previous owner couldn’t
afford to keep up with maintenance issues or back taxes.
Q: Can first-time homebuyers purchase a
foreclosure at auction?
A: Yes. There are some rules to follow, but it is
possible to get an auctioned home.
A pre-approved loan is an absolute necessity. Remember that at
an auction, the home is sold "as-is" and you usually
need up to 10% down to secure the property, then a certain
number of days to come up with the balance of the money.
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