Born to rent
For many years, I have worked really hard to try in get as many people in to a home as possible. Many obstacles need to be overcome. The right home needs to be found or built, the right school area, the proximity to jobs, the right number of bedrooms, the right home owners insurance policy, down payment and grant moneys were needed, debt to income ratios needed to be met, credit reports needed fixing and money needed to be saved.
Getting into a home is hard work for all involved, it’s something one has to earn as it’s not given away freely. The concept of grant money, down payment assistance and first time home buyer programs are so broadly misunderstood.
These programs often require the potential borrower to take a credit class, in some cases costing $200 or more, and then only to find there is no more money available. Some grant moneys are actually second mortgages placed on the home.
Many programs require the loan originator or brokerage to surrender their compensation. So chances are they will just tell you they do not do those types of loans.
Many grant programs, default to banks as the only places that will handle these types of grant loan programs. However, there is a problem with this as a whole. Most banks have a minimum credit score requirement of 680. Most grant programs also have income limits topped off by many areas having housing cost starting at over $125,000. This combination of issues leaves almost all first-time home buyers out of the picture.
Many buyers have credit scores below 620 leave very few lenders and loan programs left for these buyers. If I was to review and gauge the market based on a sampling of credit reports from our office over the last two years we would see certain trends that are very alarming. Over 70% of our clients have unpaid medical bills. Once a medical bill shows up on a person’s credit report its in collection and pushing their credit scores extremely low.
The next problem and more so for the future is student loans more than 40% of our borrowers have student loan debt. The saddest part of much of this, is many people with student loans never went to school. These people actually took out loans to help cover their housing or living expenses. These people, in many cases are Born to rent through their own doing others simply because life got in the way!
Many of our potential buyers have seen pay raises and are starting to work overtime hours. This is a positive sign even with us seeing interest rates on the rise. Many people who are tired of renting are really trying to work harder than years past. If these people cannot get overtime with their current employer most are seeking second jobs to help pay down debt and save for their down payment. These are the people we really like to help achieve the dream of home ownership.
Then we have those people that think they are very smart and crafty. They find every way possible to get paid in cash or twist ever receipt they have into a write off on their taxes, eliminating their income to avoid paying taxes. These people move from house to house leaving a mess, losing security deposits and not paying their last month’s utility bills. These items certainly find their way on to an individual’s credit report sooner than later.
These are the first people to show up to our office asking for the grant money and down payment assistance programs because their checking accounts may only have about $10 in it. Their bank statements are peppered with NSF’s (non-sufficient funds fees) They change jobs twice a year and sometimes have more money in their cars tires and rims than in their retirement accounts.
Born to rent
Our office goal for years has always been, find a way to never say no to someone, try to find a way to help people achieve home ownership, however sometimes we find ourselves stamping their file “BTR” (born to rent). It’s heart breaking to find out you care more about people then they care about themselves.
Don’t be the one with the fancy tires, be the one owning their own home.
Ultimately there are many possibilities available to families wanting to purchase a home. Some are readily available whilst others may take a little more time.
Give us a call and we can schedule a meeting where we can explain which solutions may be suitable for your circumstances.
Work on staying disciplined, stay within your budget, pay your bills on time, work hard at being responsible and we will help you get to a happy closing table.