Shawn Bradley 
There’s an uncomfortable reality in the current housing market. Too many people feel shut out; the barriers to entry are prohibitive. And here’s another truism: first-timers are much older these days. According to the National Association of Realtors, fewer young couples are buying homes than at any point in recent history. It’s a sign of the times.
For starters, the median home price in the United States is simply too high. At $430,000, that’s simply out of the price range for too many potential young buyers. Without a substantial down payment, PMI must be added to the mortgage servicing costs. Add to that the fact that the prevailing interest rate is 5% – 7%, and it’s a guaranteed no-go for many people toying with the notion of owning their own homes.
This begs the question: How are people gaining access to today’s housing market?
Chance favours the prepared mind. Prospects look much brighter when people do their homework. A little digging goes a long way to unearth precious gems in the housing market. For example, it’s always better to purchase the least expensive home in the best neighbourhood than the most expensive home in the worst neighbourhood. Communities matter when it comes to homeownership.
Vets Qualify for Special Status with Mortgage Loans
One demographic that benefits from the current housing market is veterans. These are the people who serve their country in uniform, whether at home or abroad. Veterans, service members, and eligible family members (such as spouses) may qualify according to VA loan requirements. An important document, known as a COE (Certificate of Eligibility), issued by the Department of Veterans Affairs, opens the door to a VA loan.
VA lenders are competitively priced, often at parity with, or even better than, traditional home loans. This is largely thanks to partial government backing of VA loans. Equally important, VA loans do not require a down payment from the borrower. Recall that traditional loans penalize borrowers who don’t make down payments. This comes in the form of points with PMI requirements. Credit scores, while important, are less of a factor with veterans’ home loans. Lenders are more interested in knowing whether a borrower can make payments on the loans based on current earnings.
To coin another aphorism: A rising tide lifts all boats. When neighbouring home values are substantially higher than your property’s value, this helps to drive prices up for everyone. By contrast, having neighbours with property values substantially less than yours will not do anything to improve your property’s value. Put differently, it’s always best to adopt a commonsense approach to buying real estate. Location, Location, Location – means more than the same word repeated three times.
Access to today’s stressed housing market is predicated on several factors, notably financial stability, creditworthiness, and financial literacy. Due diligence is a requirement to make things work in today’s competitive housing market. Options abound for traditional borrowers and specialized segments of society. When applying for a mortgage, your credit score, job stability, tax returns, and down payment amount play an equally important role in the quality of the loan you qualify for.
Getting Great Loans Depends on These Factors
Generally speaking, high credit scores, a low debt/income ratio, and favourable tax returns bode well for an A-grade mortgage. The same cannot be said of a borrower who clearly scored poorly in these areas. Sure, mortgages may be available for the latter group, albeit with less favourable terms. The goal, therefore, is to optimize credit scores, tax returns, and down payment amounts in anticipation of a mortgage application. Fortunately, there are effective ways to do this, ensuring that the mortgage repayment terms of 15, 20, or 30 years are more favourable.
In today’s housing market, the average age of a first-time homebuyer is 40. The market is overpriced, and demand outstrips supply. At today’s prices and in the current job market, it can feel a little overwhelming to commit to a long-term mortgage. But homeownership confers the benefit of equity in real estate. That is worth its weight in gold over time. While renting may be a cheaper option with fewer strings attached, it has no equity and no benefit to a financial portfolio.
Do your homework and invest time in your property search. Since homeownership represents the biggest investment most people will ever make, be wise about it. Shop around, do your homework, and make the most of your financial predicament.
