How Student Loan Debt Impacts Homeownership for Millennials

A recent report by Freddie Mac looks at the how student loan debt impacts homeownership for millennials.

“The low home ownership rate among millennials is still something of a puzzle—it cannot be explained solely by the increase in student loan debt,” says Sean Becketti, chief economist, Freddie Mac.

“However, student debt plays a role—higher balances are associated with a lower probability of home ownership at every level of college and graduate education.”

Data confirms that not all student debt is created equal. Students who attended schools with less-certain educational benefits have not fared well. Borrowers who did not complete their studies have fared worst of all. These groups are likely to continue to affect the pattern of homeownership among millennials.

Moreover, a recent change in Federal Housing Administration policy will make it more difficult for some student loan borrowers to qualify for a mortgage.

If you have questions about how your student loan or any other debt impacts homeownership, contact me.

I also recommend that any first-time homebuyers, or anyone with questions about the homebuying process consider taking a free homebuyers class offered by Credit Counseling of Arkansas.

Buying and Selling a Home at the Same Time

In an ideal world, you’d buy a new home, move, and then deal with the turmoil of selling. But for most people, that’s just not possible for both financial and logistic reasons. So if buying and selling a house at the same time is your only option, here’s what you need to know to make sure both processes go as smoothly as possible.

Know the market first

Before you start make sure you have a solid understanding of the housing market in your area (and the area where you’re planning to buy). Is the market weighted toward buyers or sellers? I can help you with this.

This information will help us fully strategize the best plan of action.

Also, you’ll want to hire an appraiser and price your old home fairly. Two extra months on the market because you couldn’t humble yourself to lower the price means two months you’ll be paying double mortgages.

Plan your schedule carefully

Should you buy first, then sell—or vice versa? Selling first makes getting a mortgage easier, but it also means you’ll need to find a temporary place to live. Buying first means moving will be easier, but it also skews your debt-to-income ratio, making it harder to qualify for a new mortgage—not to mention the difficulty of juggling two monthly house payments.

When determining whether you should sell or buy first, think beyond “How can I make the move as easy as possible?” Instead ask: “Can I handle two mortgages? What if my home sells for less than its listing?”

Whichever option you choose, make sure you’re prepared to accept the consequences: having to store your stuff and rent temporarily, or undergoing the financial burdens of dual mortgages.

… but don’t rely on timing

Remember, you’re not the only party in this equation. For every seller there’s a buyer, for every buyer a seller. While things might appear to be working smoothly when viewing your master plan from above, that doesn’t take into account the varibilities of other people. Closings are rife with delays. Your buyers might have difficulty securing their mortgage; your home inspector may bring up issues that need to be fixed

So even if you’ve planned to sell your home first and are prepared to rent while buying, know that even the best-laid plans go awry—and you might end up juggling both mortgages. Preparing yourself for this possibility ahead of time will ensure a smooth transition.

Know your financial solutions

For those who choose to sell first, the process is relatively straightforward other than the additional cost of a rental between homes. However, there is the option of a rent-back agreement, where you negotiate with the lenders and buyers to be able to remain in the property for a maximum of 60 to 90 days—often in exchange for a lower selling price or rent paid to the buyers. This can relieve some of the pressure of finding a new home, giving you additional time to house hunt.

But if you’re buying first, talk to me about ways to decrease your financial burden and risk. Here are the two most popular options for buyers:

Contract contingency: Buyers can request that their new home purchase be dependent on the successful sale of their old home. If you’re looking in a competitive market, this may not be a good option; however, if the seller of your intended home has had difficulty attracting interest, this may be a good deal for all parties involved—assuming you can convince them that your home will sell quickly.

Bridge loans: Bridge financing allows you to own two homes simultaneously if you don’t have deep pockets for a second down payment. This option is especially attractive if you’d planned to sell your home first and use the proceeds to buy the second. It functions as a short-term loan, intended to be repaid upon the sale of your original house.

Don’t let fear rush you

If your home has sold but you haven’t found a new place to live, don’t let anxiety push you toward a bad decision. It is best to plan on a short-term rental from the start so you don’t feel stressed or pushed into something.

Found the perfect home right on schedule? That’s great. But don’t feel like you have to compromise on things that are important to you just because you need to find a home. Conversely, don’t accept a bid that you feel is too low just because your finances are strained by two mortgages. If you have a temporary apartment set up, you’re less likely to compromise.

Certainly, selling and buying a house simultaneously will be stressful—but I can help you carefully consider and plan for the hurdles and help reduce the stress.

Do You Really Need a Realtor?

People ask me all they time if they really need a realtor to buy or sell their home. My wife and I even had that discussion when we were looking for our first house. Hey, it’s a valid question. But there are definite benefits in working with a real estate professional.

Here’s just some of the services that I offer to my clients.

I shop properties online with full access to the industry’s MLS listing system. That goes beyond just looking a listings. I also research neighborhoods, comps and even the sales history of a property for my clients.

I hit the road and see properties in person before I show them to my clients. That helps me become familiar with the property, its benefits and its challenges so that  I can point that out when you see see it.

I invest in marketing for my clients. Remember, I don’t get paid until your real estate deal closes. So I am committed enough to my clients to invest in open houses and marketing knowing that it will all pay off, for you and for me, in the end.

I’m there to help my clients, even through the sometimes bumpy real estate transaction.

As a general rule of thumb, for every hour an agent spends in your presence, he or she will spend an average of nine hours out of eyesight working on your behalf.

Let me help you find your dream home in NWA!

 

5 Ways to Quickly Raise a Down Payment

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Of course the best way to come up with a down payment is to save for it. But what if you happen upon your dream home? Here are 5 ways to quickly raise a down payment, as well as the pros and cons of these options.

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Solutions to 7 Common Mortgage Problems

In June, the Consumer Financial Protection Bureau (CFPB) launched an enhanced version of its database of consumer complaints about financial companies–mainly lenders, banks and credit card issuers.

Nearly 8,000 complaints were posted, a tiny fraction of the 627,000 complaints it has fielded since 2011. Of those, more than one-fourth were from mortgage borrowers, revealing a bottomless pit of frustration with lenders and servicers. If you have a complaint, the CFPB can help.

Meanwhile, MSN has compiled a list of seven recurring mortgage problems that borrowers face, according to the complaint files and includes suggestions for how to address them.

Read their findings here.

Finding Your Ideal Neighborhood

Most home buyers are looking not just for their ideal home, but also an ideal neighborhood.

But what makes an ideal neighborhood? What should you evaluate or consider when you are trying to determine where you want to live?

Here are some general guidelines that might help you evaluate your options.

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6 Essentials You Need to Know About Home Inspections

I get a lot of questions about home inspections from both home buyers and home sellers.

inspectionFor sellers, impending home inspections can be a reminder of all those small issues with the home that they haven’t taken care of over the years. And many buyers are concerned that home inspections might uncover some serious issues with their dream home.

Here are 6 tips that can make home inspections go smoother for all involved.

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Calculating Whether You Should Rent or Buy A House

Should you rent or buy a house? This is a question most of us will face in our lives, at least once, and it’s one that I’m constantly helping people answer.

Realtor.com created a calculator that helps people compare the net cost of buying a home against the cost of renting over time.rent or buy a house

Net costs compare the total amount of money you would be spending over time, minus the potential value you might receive if you someday sell the property. Using the tool, you’ll see that the amount of time you plan on keeping the home has a major impact.

To get more personal, you can customize the advanced options to crunch more specific numbers and evaluate more specific scenarios. But keep in mind that a financial comparison is just one of many factors when deciding whether to rent or buy a house.

If you have questions about whether you should rent or buy a house, contact me. I’ll be happy to help you weigh the pros and cons of each. I can also help you find rental property if that’s the best option for you financially.

Fill out my online form.

New Home Development in Fayetteville AR

Falcon Ridge, a new home development in Fayetteville AR, is a home buyer’s dream – offering all phases of new construction homes with designer finishes at an attractive price point.

new home development in Fayetteville ARLocated in East Fayetteville, Falcon Ridge is a new home development by Brittenum Construction. The homes are located close to major traffic routes for easy access, but in an area of town that feels suburban, comfortable and relaxed.

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Buy a Home Now Instead of Renting

A home is probably the largest single purchase that most of us make in our lifetime. It’s a huge expense. But, there’s an interesting story out on realtor.com that says even with the expense involved, you still could save more than $200,000 over the next 30 years if you buy a home now instead of renting.

I know, that’s over 30 years. What about your money now?

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