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First-Time Homebuyers, Home Loans, Housing, Mortgages |

Buy Now, Don’t Wait!

First time buyers I talk to are discouraged. They are getting out bid again and again, and prices climb, seemingly overnight. Closing costs increase with the value of the home, and third-party inspectors are booked solid. It seems like a good idea to take a break from home buying and wait for the bubble to burst in a year or two. Surely prices will become more reasonable?

Except they might not do that.

As housing prices climb and the largest generation in history comes of age to buy a home, the market is caught in a vise between limited supply and ever burgeoning demand. What does this mean? That homes are appreciating roughly 13-15% per year, and in some markets, 25%. And they will continue to do so. With interruptions in the supply chain, new construction will slow, and the resulting homes will be more expensive because the materials that built them were more expensive. It’s quite possible that the market will be caught between this rock and that hard place for another 3-4 years.

So, what can a first-time buyer do?

First, you do NOT need 20% to buy a home. As a first-time buyer, you only need 3% of the value of the home, plus closing costs, to buy. You will pay mortgage insurance to mitigate the risk to the lender of lending 97% of the value, but this makes it at least possible to get into a home in Salem, where the average home price is $280,000-300,000.

Second, look into Down Payment Assistance Programs. Your local HUD office is the place to start, but don’t be shy—keep looking until you have what you need!
Third, buy the home you can live in for five years, and quit looking for the perfect home with granite counter tops and a big backyard and an extra room for mom. Buy the two bedroom in the neighborhood that is beginning to make a comeback and spend five years fixing it up. In that time, with the current rate of appreciation, you will build the wealth you need to buy your dream home. This is how home buyers managed in the 80s when homes were cheap, but interest rates were 18-20%.
If you make a plan, and stick to it, you can absolutely achieve the dream of home ownership.

Call 503-588-0211 and ask for Elena or Melody for more information on getting preapproved.

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We're Heritage Grove Federal Credit Union. We're here to help you stand tall, to offer great solutions and sound financial advice. We want to help you achieve your financial goals, and we look forward to serving you. Call us at 503-588-0211 or 1-877-695-8321 with questions, any time!