Do I Still Need A Down Payment? (And Other Questions)
This may sound pretty old-school, but although the housing market is moving quickly this spring, there are many potential buyers who still list "saving for a down payment (as) the main roadblock" to their owning a home. This morning, Mortage Professional America (MPA) broke down the numbers from Zillow's semi-annual survey in their article "What's Holding Back Would-Be Home Buyers?" It's short, to-the-point, and definitely worth a read.
Things have changed since the housing crisis, as evidenced by this renewed emphasis on down payments. For those of us who bought shortly before or during the 2005 subprime housing bubble deflation, the idea that someone might delay home ownership for that purpose may be a strange readjustment (although it sure sounded obvious to our parents), but it's certainly true that lending practices have changed since that time.
It's not a bad change, either. Saving up money for a down payment has obvious benefits, such as lower monthly mortgage payments after a purchase and more desirable types of financing with bigger down payments, to scratch the surface.
There are still options for those without down payments, though, such as Wisconsin's USDA rural development program (don't be deceived by the name-- even places like Hudson and River Falls can qualify). If you're dying to own a home, this type of possibility is a great reason to reach out to an agent (me, preferably).
What If My Dream Home Isn't For Sale?
If a specific property has caught your eye, the house doesn't have to be on the market in order for you to reach out with an offer, so meeting with a lender this week would be an excellent strategy. We all know by now that the number of homes on the market has shrunk dramatically. A few weeks back, I cited numbers on my Facebook business page from the Minneapolis Area Association of Realtors - MAAR that compared this time in 2008 (30,000+ homes on the market) to this time in 2017 (8,820 homes on the market in February)-- I'll attach the link here again so you can look into it.
As a result, realtors are pounding the pavements for clients who want to move into specific homes and neighborhoods, knocking on doors and sending out letters notifying owners of their clients' interest in local properties. And yes, these techniques do result in sales! It's more common than you think.
Can Realtors Use Other Tools? Getting Creative In A Historic Market
Many realtors are also using tools such as "withholding" (when a property is almost ready to go on the market, and an agent arranges with clients to market the property ahead of time) and simple in-office conversations to arrange sales. I recently had an offer to purchase on a property before we could even add photos to the listing. Real estate agents hear about houses getting ready to sell long before the owners have done their painting, decluttering, and minor renovations to prepare for listing, and I know I say this often-- but it's more important now than ever to connect with an agent who can keep their eyes and ears open for your best interests in purchasing a new home.
Last week, I wrote about two of the tools I use in my business for potential clients wanting to know if their home value has gone up enough for them to consider selling. I use these same tools to set up searches for clients in their areas of interest, and you can make use of them as well. I'm attaching a link to my current favorite below-- just select "Interested Buyer" to describe yourself, and you will fill in some criteria about your idea home neighborhood (zip code, price range, beds/baths). You will need to provide your contact information so you can receive the report, but this information gets forwarded directly to me, not to a data bank or robot info-sales agency.
Posted by L. Lathrop, for Jim Burns