Weekly Jacksonville NC Real Estate E-Zine
February 11, 2010
In this Issue:
Walter’s World: Only 8 Steps to a Home in Jacksonville NC
Special Report: A shift in payment priorities
Featured Article: Still part of the dream?
Recommendations & Resources: Rent vs. buy
Walter’s World – Only 8 Steps to a Home in Jacksonville NC
If you are renting and have a stable job with some savings, and a credit score in the 620 or more, you can likely qualify for a VA, FHA, or conventional financing for a home in the Jacksonville NC area.
The First Step towards buying a home is è Decide to Buy
There might be some fears you face when thinking about buying your first home
· I can’t afford to buy my dream home – the best way to get closer to buying your dream home is to buy your first home.
· I haven’t saved enough for a down payment – there are several programs that require little or no down payment
· I can’t afford to buy a home – buying a home in most cases is a better deal for a family than renting especially over a 2 to 3 year time period – call a mortgage lender to determine if you are eligible
Step 2 is Finding a Qualified, Professional Real Estate Agent – for full article, “Only 8 Steps to Home”
A Shift in Payment Priorities
U.S. News & World Report recently published an article that indicated a pretty dramatic change in the way homeowners are now tackling their debt.
According to the article, a study released by Transunion showed that Americans are increasingly more likely to make payments on their credit cards before payments on their mortgages. The data shows that roughly 6.6 percent of borrowers paid credit cards first in the third quarter of 2009, up from just 4.3 percent in the first quarter of 2008.
This is a shift in the historical norm; which has long been slanted toward house payments as a priority ahead of other bills. Credit the housing bust nationwide for the change.
As homeowners struggle with unemployment and drops in their homes’ value, they have perhaps become reluctant to commit more money into an asset that might not be worth what they owe on it. Whereas keeping up with credit card payments continues to give them access to necessities such as gas, clothing and groceries.
It also probably signifies part of the issue that caused the housing bust. Access to no-money down or low-down payment loans that proliferated the market during the housing boom allowed buyers to get into homeownership without much “skin in the game.”
In the days of 20-percent down payments, homeownership was something you worked for, saved up for and therefore something you were less likely to give up so easily. It’s a lesson that you can bet banks are heeding.
Still Part of the Dream?
The U.S. Census Bureau recently revealed that home ownership in the fourth quarter of 2009 had dropped to 67.3 percent, about the level before the housing boom the nation experienced early in the past decade.
The percentage of home owners reached a peak of about 69 percent in 2004, during the height of the housing frenzy. It started dropping in 2006, as homes began being lost to foreclosure.
So the question: Is home ownership still part of the American dream?
Where you land on that important question might depend on whom you listen to. Many “experts” are saying that home ownership is overrated, and most people should be renting. Congressman Barney Frank, Financial Services Committee chairman, recently said that lower-income Americans should probably rent, not buy, their homes.
While Frank’s comment was made in the context of criticizing the government’s push for – and subsidies of – home ownership for everybody, a philosophy that probably led to the subprime mortgage mess, it’s not a comment that’s going to sit squarely with everyone.
Let’s face it, despite the declining number of home owners, more than 2 out of every 3 American adults fall into that group. Two out of three of us must consider it part of the dream, because as even as it becomes increasingly difficult to maintain ownership – unemployment, foreclosures, etc. have taken their toll – only a small percentage of us are readily giving it up.
Is home ownership for everybody? Probably not, as the big push for home ownership for all helped get us into a recession. But as the debate rages on about how involved the government should be in providing home ownership opportunities, let’s not just chuck away home ownership’s role in the American Dream.
Sure, there are financial advantages to owning a home. Tax breaks and equity build-up, for example. Paying rent gives you neither. But there are other components of home ownership with value that can’t be measured in dollars and cents.
There is a social component of owning your own home. Pride of ownership, while an abstract concept, has merit. The feeling of being part of a community, a school district, is rewarding to many. Home owners also enjoy freedoms that renters do not.
If you own your own home, you can paint the walls pink if you want. Have a dog. Blast your stereo at 2 a.m. You don’t answer to a landlord.
Does home ownership make 100-percent sense for everybody? No. Has pushing it on those who are not ready caused problems? Yes.
But no matter what the “experts” say, no matter how many have somehow decided home ownership is less desirable than it used to be, it remains part of the American Dream.
Recommendations & Resources
Rent vs. Buy
A real estate agent worth his or her weight should be able to help you figure out whether renting or buying makes financial sense for you. Each person’s situation is different, and should be considered carefully with a professional. However, for a quick, online general assessment you can visit Ginnie Mae’s “Rent vs. Buy” calculator.
Have a great week!
Walter Whitehurst, Broker
Keller Williams Realty