Yesterday we talked about how Mom and Dad are bidding against a shrinking supply of homes near urban areas. Everyone wants to move to be closer to amenities, that puts Mom and Dad in a precarious position, no one wants to buy their home in the Burbs so they can buy a new home. The Kids are fighting for their first home in a really tight market and competing against Mom and Dad.
Oh wait, everyone needs to work with The Bank. Hi Millennials, this will be quite the trip for you. I’ll give you a hint………………, banks are awful to deal with!
- Prior to the great recession it was crazy, it you could walk and talk you could easily get a mortgage then everything fell apart.
- Now the pendulum has swung back the other way. Now you need a credit score that is damn near perfect, a huge down payment, and huge reserves saved away just in case someone gets run over by the bus.
- TWENTY PERCENT – yup, that is what you are going to need as hard-earned-cash for your deposit. So, if you’re looking at a nice home that’s $250,000 (in today’s market that’s modest) you will need only $50,000.
- PMI – Private Mortgage Insurance. This one is a doozy! PMI does NOTHING for you! PMI protects the bank from people that can’t pay a 20% down payment. It is a private insurance policy that is there solely to protect the bank.
So, mom and dad are competing against the kids and all of them are fighting with the bank. That’s about right.
There is hope! We suggest:
- Stop paying rent – rent is where you pay other people so they can make money off of you. It is ok for a short while but makes no sense in the long run!
- Your monthly mortgage payment could easily be less than what you are paying in rent.
- FHA mortgages are very workable right now! Some buyers can purchase with as little as 3½% down. That is workable!
- Interest rates are still at record low rates.
- Student Loans have new rules and you owe it to yourself to check it out.
- Millennials, The Kids, are rapidly moving to homeownership, you should also!
- Boomers, think about lowering the price of the house in the Burbs so that you can have what you want.
It’s only money, you deserve a new home! Call us at (802) 985-5855 we can help!