Millennials Flock to Low Down Payment Programs

A recent report released by Down Payment Resource shows that 65% of first-time homebuyers purchased their homes with a down payment of 6% or less in the month of January.

The trend continued through all buyers with a mortgage, as 62% made a down payment of less than 20%, which is consistent with findings from December.

An article by DS News points to the new wave of millennial homebuyers:

"It seems that the long-awaited influx of millennial home buyers is beginning. Ellie Mae reported that mortgages to millennial borrowers for new home purchases continued their ascent in January, accounting for 84 percent of closed loans."

Among millennials who purchased homes in January, FHA loans remained popular, making up 35% of all loans closed. Ellie Mae's Executive Vice President of Corporate Strategy Joe Tyrrell gave some insight into why:

"It is not surprising to see Millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. Across the board, we're continuing to see strong interest in homeownership from this younger generation."

Bottom Line

If you are one of the many millennials who is debating a home purchase this year, let's get together to help you understand your options and set you on the path to preapproval.

Terry L Barnette
REALTOR®, Broker, ABR, e-Pro, SFR, BPOR, Master GRI
Crye-Leike REALTORS®
Direct/Text: 423-463-0024
Fax: 423-473-8275
Office: 423-473-9545 x217

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Why Pre-Approval Should Be Your First Step

 Monday January 16th, 2017  First Time Home Buyers, For Buyers, Move-Up Buyers

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. 

Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

"It's highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets."

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding "your credit, debt, work history, down payment and residential history." 

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

1. Capacity: Your current and future ability to make your payments
2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

Terry L Barnette
REALTOR®, Broker, ABR, e-Pro, SFR, BPOR, Master GRI
Crye-Leike REALTORS®
Direct/Text: 423-463-0024
Fax: 423-473-8275
Office: 423-473-9545 x217

Download My Mobile APP Here! 

What's Your Home Worth?
Get 3 Estimates Instantly

KM4HDV
TN Lic# 00291120 Firm Lic# 005463 

How Will Mortgage Rates Impact Home Prices

Will Increasing Mortgage Rates Impact Home Prices?

 Thursday December 8th, 2016  First Time Home Buyers, For Buyers, Housing Market Updates, Interest Rates, Move-Up Buyers, Pricing

There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases.

However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.

Here is a graph showing what actually happened:

Last week, in an article titled "Higher Rates Don't Mean Lower House Prices After All," the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:

"[P]rices weren't especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence."

Last week's jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.

Bottom Line

We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.

2 Myths About Mortgages

Fannie Mae's "What do consumers know about the Mortgage Qualification Criteria?" Study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home.

Myth #1: "I Need a 20% Down Payment"

Fannie Mae's survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either don't know (40%) or are misinformed (36%) about the minimum down payment required.

Many believe that they need at least 20% down to buy their dream home. New programs actually let buyers put down as little as 3%.

Below are the results of a Digital Risk survey of Millennials who recently purchased a home.

As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%!

Myth #2: "I need a 780 FICO Score or Higher to Buy"

The survey revealed that 59% of Americans either don't know (54%) or are misinformed (5%) about what FICO score is necessary to qualify.

Many Americans believe a 'good' credit score is 780 or higher.

To help debunk this myth, let's take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.1% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your reach.

Terry L Barnette
REALTOR®, Broker, ABR, e-Pro, SFR, BPOR, GRI
Crye-Leike REALTORS®
Direct/Text: 423-463-0024
Fax: 423-473-8275
Office: 423-473-9545 x217

Download My Mobile APP Here! 

KM4HDV
TN Lic# 00291120 Firm Lic# 005463 

Buying A Home Can be Scary... Until You Know The Facts!

Terry L Barnette
REALTOR®, Broker, ABR, e-Pro, SFR, BPOR, GRI
Crye-Leike REALTORS®
Direct/Text: 423-463-0024
Fax: 423-473-8275
Office: 423-473-9545 x217

Download My Mobile APP Here! 

KM4HDV
TN Lic# 00291120 Firm Lic# 005463 

Starting to Look for a Home? Know What You WANT vs. What You NEED

 Wednesday October 19th, 2016  First Time Home Buyers, For Buyers, Move-Up Buyers

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In this day and age of being able to shop for anything anywhere, it is really important to know what you're looking for when you start your home search.

If you've been thinking about buying a home of your own for some time now, you've probably come up with a list of things that you'd LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale with rose-colored glasses.

Do you really need that farmhouse sink in the kitchen in order to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the man cave of your dreams be a future renovation project instead of a make or break now?

The first step in your home buying process should be to get pre-approved for your mortgage. This allows you to know your budget before you fall in love with a home that is way outside of it.

The next step is to list all the features of a home that you would like, and to qualify them as follows:

• 'Must Haves' – if this property does not have these items, then it shouldn't even be considered. (ex: distance from work or family, number of bedrooms/bathrooms)
• 'Should Haves' – if the property hits all of the must haves and some of the should haves, it stays in contention, but does not need to have all of these features.
• 'Absolute Wish List' – if we find a property in our budget that has all of the 'must haves,' most of the 'should haves,' and ANY of these, it's the winner!

Bottom Line

Having this list flushed out before starting your search will save you time and frustration, while also letting your agent know what features are most important to you before starting to show you houses in your desired area.

Terry L Barnette
REALTOR®, Broker, ABR, e-Pro, SFR, BPOR, GRI
Crye-Leike REALTORS®
Direct/Text: 423-463-0024
Fax: 423-473-8275
Office: 423-473-9545 x217

Download My Mobile APP Here! 

KM4HDV
TN Lic# 00291120 Firm Lic# 005463 

Do You Rent?-Own A Home And Build Wealth!

Terry L Barnette
REALTOR®, Broker, ABR, e-Pro, SFR, BPOR, GRI
Crye-Leike REALTORS®
Direct/Text: 423-463-0024
Fax: 423-473-8275
Office: 423-473-9545 x217

Download My Mobile APP Here! 

KM4HDV
TN Lic# 00291120 Firm Lic# 005463