What’s Stopping Home Buyers?
A Look at the Most Common Challenges Home Buyers Face & How to Overcome Them
It’s no secret that we’re in a “Seller’s Market” right now in Southern California, meaning that the inventory of homes for sale doesn’t meet the current demand. As a result, some home buyers are finding this a difficult time to buy a home. Interest rates are low, which makes this a very desirable time to purchase property, yet sometimes there are roadblocks to success.
A recent survey conducted by NerdWallet reports the common homebuying setbacks according to non-homeowners:
- Saving for a down payment
- Credit Score
- The Coronavirus Pandemic
- Lack of Inventory
- Personal Debt
It is possible to overcome these challenges, but it can take persistence, planning, patience, and professional guidance.
Some home buyers believe that you need 20% down in order to purchase a home, but there are many other loan options that allow one to take advantage of today’s interest rates with a much smaller initial investment. FHA loans are available with as little as 3.5% down and for veterans, VA loans may be an option with no money down. Some cities offer down payment assistance programs and buyers may have the option of tapping into their 401K or other retirement accounts for a home purchase.
Credit and Financing
Some potential home buyers think that you must have perfect credit in order to buy a home. That’s not necessarily true. FHA loans, for example, have more flexible credit guidelines that allow buyers to get into a home without perfect credit. If you’re considering buying a home within the next year, now is the time to have a lender run your credit and help you assess your overall financial picture to determine what you can do in order to best qualify for a mortgage when you’re ready to move forward. Getting a mortgage may be easier than you think.
Like many other industries, the pandemic has had a massive impact on the housing market. As people try to get back to a state of pre-pandemic normalcy, the economy and consumer spending is trending upwards. We’re also seeing this reflected in the housing industry. Low-interest rates have intrigued potential home buyers causing home prices to skyrocket 18.7 % within the past year.
Lack of Inventory
Inventory in many neighborhoods is still critically low, but in some areas, it has started picking up. If you’re working with an experienced, local Realtor who has connections with other local Realtors, you may be able to find out about new listings before they hit the market. They will also be in a position to help you determine whether slightly changing your criteria or considering other similar neighborhoods would increase your choices.
Whether it’s student loans, credit cards, or car loans, debt can feel overwhelming and homebuyers sometimes feel that they want to pay everything off before buying a home. Yet sometimes paying off one line rather than all credit lines, or paying one or more debts down substantially can be enough to ease the burden and allow you to comfortably qualify for a home purchase. Talking to a lender who can help you assess your overall financial picture is a good first step to determine how best to move toward the goal of buying a home.
If you’re considering buying a home, give us a call at 562.896.2456 and we’d be happy to walk you through the process and help you find your dream home.