The National Association of Realtors recently released the 2018 Aspiring Home Buyers Profile. Of the non-homeowners surveyed, 46 percent were age 34 or younger, 57 percent earn less than $50,000 annually and 81 percent live in urban or suburban areas. Let's look at the mindset of these potential buyers:
According to the survey, 82 percent reported future homeownership goals, with 58 percent saying now is a good time to buy. So why aren't more first-time buyers coming to the table? Affordability.
While 51 percent of renters expect rent to increase this year, only 15 percent say that would motivate them to buy a home. Improved financial situations and significant lifestyle changes such as marriage or starting a family are considered more compelling motivational factors to homeownership.
Down Payment Misconceptions
Among non-homeowners, 36 percent felt that saving for a down payment would be very difficult and 30 percent said that it would be somewhat difficult. Comparatively, the 2017 Profile of Home Buyers and Sellers found that 87 percent of non-homeowners thought they needed a 10 percent down payment or higher. This misconception clearly plays a role in potential buyers' concerns around affordability.
Things To Be Aware Of
Low down payment loans and assistance programs are available. FHA loans require a down payment of 3.5 percent, while Fannie Mae's HomeReady program allows for a 3 percent down payment for first-time and repeat buyers.
It is important to do routine credit checks and keep debt-to-credit ratios low. Fannie Mae and Freddie Mac have raised the debt-to-income ratio from 45 to 50 percent, while FHA loans allow ratios as high as 55 percent. Lender guidelines have become more lenient for credit scores, putting the minimum at just 620 for many programs.
For additional information/assistance please contact us at:
Byrdhometeam.com, or 413-247-2277 (Our Team Hot Line)