The Biggest Hurdles to Home Ownership

With mortgage rates still near historical lows, why aren’t more home owners making a move? Housing analysts blame student loan debt, overly strict lending standards, and lost equity as the leading culprits behind a sluggish housing recovery. But what do home owners say?

Mortgage information site HSH.com surveyed 786 home owners at the end of 2013 about their experiences when it came to finding and financing their home. The top six biggest hurdles to home ownership were identified as:

  1. Home prices (flagged by 23.5% respondents): Rising home prices are not just difficult for young home buyers. Home owners aged 50 to 59 reported the highest incidence of struggling with higher home prices.
  2. Down payment (22.9%): Those aged 18 to 29 reported the least trouble with down payments, while home owners aged 30 to 39 and 50 to 59 reported the highest incidence of down-payment struggles.
  3. No issues (20.9%): A significant portion of respondents said they don’t face any hurdles to home ownership, with older home owners reporting fewer hurdles than their younger counterparts.
  4. Credit score: 12.8%
  5. Interest rates: 12.6%
  6. Property taxes: 7.3%

Source: “Survey: What’s the Hardest Part of Affording a Home?” FOX Business (July 2, 2014)

Proposal to Raise FHA Loan Down Payment

Currently, home owners who take out FHA-backed loans are required to have a minimum down payment of 3.5 percent; the GOP bill seeks to raise that to 5 percent. The GOP says it wants to protect home owners against default and improve FHA’s finances.

The draft legislation also calls for lowering FHA loan limits in several areas.

As of now, the maximum size of FHA-backed loans in expensive areas of the country is set to drop to $625,500 from $729,750 as of Oct. 1. In less expensive areas, the limit may drop to $271,050. The GOP draft bill wants to drop the limits even more to 125 percent of a county’s median home price, Dow Jones reports.

“While we support reforms to strengthen the program, changes should not be made at consumers’ expense by drastically impacting the affordability and availability of mortgage capital,” Ron Phipps, the National Association of REALTORS®’ president, said in a statement.

Source: “House Republicans Aim to Raise Money Down for FHA Loans,” Dow Jones International News (May 23, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

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Helping Home Buyers to Get What They Want

This economy hasn’t taken away the desire to own a home!

People still want a place of their own to raise their families, share with friends and a place to feel safe and secure.  Over 50% of the current buyers are first-time buyers.  For people with a down payment and good credit, this may be the best time ever to buy a home.

This economy hasn’t eliminated the need or aspiration for a larger or newer or older or different home.  People’s situations change and their housing needs change also.  They may just not feel the urgency because they already own a home even if it doesn’t fit their current needs.

The role of today’s real estate professional has changed.  It isn’t enough to be an order taker.  It’s now about providing service way beyond what the buyer and seller expect.  It’s not just finding the “right” home; it’s about showing them the way to minimize the cost of housing by negotiating the price and terms.  It’s about recommending alternative financing and giving them options.  It’s all about helping them to make better decisions. It will take information and tools.  It will take knowledge and training.  But more important, it will take commitment and investment.  Today’s professional must be committed to doing more than the minimum necessary.