The Skinner Team

First-Time Buyers Are Slowly Re-Emerging

First-Time Buyers Are Slowly  Re-Emerging

I just had the opportunity to read a great article in Realtor Mag that stated about 51% of buyer’s nation wide identify themselves as a ‘First Time Home Buyer’.  This is up from 35% just about a year ago. However, 9% of buyers say they can’t qualify for a mortgage and 25% of buyers say they don’t have enough money for a down payment.

Buying your first home can be daunting, but there are several things you can do to get prepared for the process. The first thing is to get your credit in order.  There are tips all over the internet, but one of the most important things is to pay your bills on time.  Your payment history comprises almost 35% of your FICO score.  The second piece of advice is to work on your debt to income ratio.  The lower your monthly payments (credit card bills, car payments, student loan payments, etc), the more you are usually eligible to borrow.  Pay some of your debt off or refinance to get a lower monthly payment.

Last but not least, start saving! There are plenty of programs out there that do not require you to have 20%.  There are even some loans that we have available here in the mountain region that really only require you to have enough money to put down an earnest money deposit, which is typically 1-2% of the purchase price.  However, having more money to put down can allow you to have lower monthly payments or get into a more expensive home. For more tips or tricks, feel free to reach out to me!

First-Time Buyers Are Slowly Re-Emerging

Last August, about 35 percent of home buyers identified themselves as first-time buyers. Flash-forward one year later, the share of buyers identifying themselves as first-timers has soared to 51 percent, according to research by®.

As more first-time buyers re-emerge, new challenges – mostly financial – are becoming more paramount for the market, notes Jonathan Smoke,®’s chief economist, in his latest column.

For example, about 9 percent of buyers are now reporting having difficulty qualifying for a mortgage, up from 5.6 percent a year ago. The number of buyers saying they need to improve their credit score has since doubled, increasing from 9.7 percent of all buyers in 2015 to 19.5 percent this August. What’s more, the percentage of buyers who say they don’t have enough funds for a down payment has increased from 16 percent a year ago to 25 percent this year.

“The market has seen growth despite higher prices in part because of pent-up demand from very qualified buyers who were able to meet the challenging mortgage qualifications that are the norm these days,” Smoke says. “A key question for the months ahead is whether a higher share of first-time buyers is ready or capable of qualifying for a loan and closing on a home.”

Smoke offers the following financial tips for first-time buyers who want to make a move sooner rather than later:

  • Get your finances in order: Know your FICO score and take efforts to get it above 700 to improve your chances of qualifying for financing and securing a better interest rate. Also, start collecting financial records, like recent bank and financial statements, the past two years of income tax filings, and pay stubs.
  • Know your down payment: The average down payment for 2016 is 11 percent nationwide. That can vary dramatically, however. Several down payment assistance programs also are available to help.
  • Get pre-approved: Getting pre-approved will prove you do have the finances in place to qualify for a mortgage and purchase a home. “A pre-approval letter as part of an offer will communicate to the seller that you have the ability to close,” Smoke notes.

Source: “First-Time Home Buyers Come Out in Force – But Face New Challenges,”® (Sept. 8, 2016)