Can’t Find Your Lake Of The Ozarks Dream Home? Buy A Fixer-Upper And Make It Your Own
Earning the designation of best recreational lake in the U.S. has made the Lake of the Ozarks even more popular among visitors and home buyers. Local businesses have enjoyed the benefits of booming tourism and it’s made for an incredibly hot real estate market.
On the other hand, with home buyers from across the country eager to own a slice of paradise at Lake of the Ozarks, local real estate listings are dwindling. The Property Shop at the Lake owner Tina Stotler said this dynamic has made it especially difficult for mid-level buyers to find Lake homes that fit their budget.
“Lake-wide, we are experiencing a very low inventory of homes, both waterfront and off the water,” Stotler said. “And homes under $400,000 are particularly hard to find.”
But all is not lost. Stotler says investing in a fixer-upper is a great opportunity to purchase a lake home without breaking the bank.
Check out some before/after fixer-upper photos from a home sold by The Property Shop at the Lake:
Lake Fixer Upper After Photos
“Fixer-uppers are an affordable way for buyers to get into a home and customize it to their lifestyle,” Stotler said, noting that obtaining a loan for renovation projects is easier today than in the past. She regularly works with lenders who understand the dynamics of renovation projects and have lengthy experience in helping borrowers navigate the approval process.
“Lenders now have a special loan program for purchasing a fixer-upper that includes additional funds to update and remodel. There is only one closing and one closing cost.”
Stotler stressed that financing is only one of many factors to consider when purchasing a fixer-upper property. Owners should take into account the location of the house, the type of lot it sits on, waterfront issues, foundation problems, things that can and cannot be changed, as well as the overall potential of the home.
“One of the most important things to consider when purchasing is to keep an open mind. If the location of a property is good and the lot is nice, you should consider the potential in the house,” Stotler said. “Buying a property that needs work gives you the opportunity to ‘make it’ what you want.”
Still, tackling a fixer-upper is not for the fainthearted: it can be a daunting task for even experienced renovators.
Renovation projects can cost more in time and money than anticipated; and Stotler emphasizes working with a real estate professional who has relationships with local contractors and sub-contractors along with experience in guiding buyers through the fixer-upper process, is a must.
Lake Fixer Upper 2 After Photos
“Your Real Estate Professional should be able to help guide you with more than just the purchasing aspects of buying the property,” Stotler said. “Ask them if they have information on permitting, recommendations for contractors, making sure you can permit your dock, or replace it with a bigger dock, etc. The list is long and you want a realtor who knows the answers.”
Herself nearing the end of a lengthy journey through renovating her family’s former Lake home, Stotler is well aware of the pitfalls and the rewards of bringing new life to older homes.
“When I decided it was time to move back into a lakefront home, I looked for several months to find the perfect ‘fixer upper,’“ Stotler said. “Based on purchase price, renovation costs and accomplishing my ideal results, I realized that nothing could replace the location and the memories of my parents’ lake house.”
Stotler purchased the house from her brother and began the renovation process utilizing the craftsmanship of local contractors and sub-contractors to add 1,340 square feet and a 2-car garage to her former childhood lake home.
Nine months later, she readily admits that renovating a fixer-upper can be an arduous process, but she stresses that the final result makes it well worthwhile.
“My ‘dream home’ and ‘fixer-upper’ will be done sometime in mid-September and I’ve experienced first hand how taking on renovations, big or small is not an easy decision or an easy task,” Stotler said. “It takes a lot of imagination, cooperation and patience. But the end result can be very rewarding.”
When shopping for a home to buy, it’s fairly easy to see warning signs as you walk through the house. Typically, good things such as a new roof or HVAC system and bad things such as water damage from leaks or the smell of mildew can be apparent.
But what about when you are in the market for land and there’s no house on it? Do you know what to look for? Is it worth even looking at an entire piece of land, or can you just go by the photos online?
Franklin Realtor Tim Thompson, who is often referred to as “the land man,” has some great tips on how to buy land and who to buy land from.
“Purchasing land is similar to buying a home, but different,” Thompson said. “One thing people need to do when looking at land is walk through it just like you would a house.”
He said the biggest mistake people make is not walking the land. He advises people to ride the with your Realtor, but then ask if you can go back and walk it.
“You need to find all the corners,” Thompson said. “See who your neighbors are. Look over the fence line. The last thing you want to do is buy a piece of land that has a big sinkhole in the middle of it.”
Below are Thompson’s tips on how to get the most out of a land purchase. Everything varies by county and state, but many of these tips cover any piece of land, no matter where it’s located.
1. Look at land in the fall.
Thompson says in the fall and winter when the leaves are down, it’s often much easier to see what’s around you than when the trees are in full bloom.
2. Ask about easements and restrictions.
Too often, Thompson says, people buy land assuming they can do whatever they want to on it. That’s not the case. “Sometimes there are deed restrictions on land that restricts the size of house you could build or ways you can use the land, so you should always check that by going to the county in addition to asking your Realtor.”
Thompson added that there can also be unrecorded easements, so it’s important to ask about that as well. “There have been times where one farmer will give another farmer the right to cross his land,” he said. “Maybe this has been going on for 15 years. Sometimes agreements like that can come back to bite you.”
3. Get a survey.
Anything larger than a 5-acre tract of land needs a new land survey, Thompson said. “You never know if someone crossed over the property line and built a barn or something. Another person’s property can be on your land and nobody knows it until a survey is done. Be sure to make sure the property isn’t in a flood zone as well. A survey will indicate that.
4. Have a larger down payment.
Banks typically won’t do loans on land for the same down payment as a house. “Banks typically want more like 25 percent down, so it’s important to be prepared for that.”
5. Build in due diligence time.
Thompson advises writing a minimum of 14 days of due diligence time into any contract, so that you have time to do your research before you sign. “It could be that it’s a tract already approved by the county, but I recommend up to 30 days due diligence period to check on water, septic and sewer. Fourteen days would be the bare minimum.”
6. Use a Realtor familiar with land sales.
Thompson said because land purchases are different than home purchases, it is important to buy land from a Realtor experienced in selling land. “I get a lot of contracts from agents that don’t know how to sell land, which is fine, but I have seen contracts where the Realtor didn’t ask for a survey or a due diligence period. I see it all the time. Realtors don’t always know how to sell land.”
He advises leaning on referrals from friends who have purchased land or looking online to seek out Realtors with a lot of land listings.
7. Be prepared to wait.
If you buy land in Williamson County with the intent to build a home on it, Thompson advises that it can be a lengthier process than many might expect. “If you buy property that isn’t already approved, there is a very long wait period to get approval to build on it. It can be a good year before you can put one brick in the ground.”
8. Check perk-ability.
If a piece of land doesn’t have sewer service, the soil underneath the ground can dictate what you are able to build. “Just because you have 50 acres doesn’t mean you can build whatever you want,” Thompson said. “If the soil on your land is clay, it won’t soil test out well and you may not be able to build a five-bedroom house, but be limited to a three-bedroom house just because of the soil.”
Thompson advises always doing a preliminary perk test with a licensed soil scientist in the area before buying land.
Original Date: June 11 2018
You are ecstatic because you have received seven offers on your home, many of them over the asking price. Your initial reaction is to choose the highest, but wait. The highest offer isn’t always the best one. You should scrutinize every bid before you make this important decision.
For example, if you receive an offer well above the asking price but the buyer has only a 5 percent down payment, this could become a problem if the bank does not appraise your home at the proposed purchase price. If the buyer can’t put more money down to bridge the difference between the offer and the appraised value, the deal could fall apart or have to be renegotiated — at a lower price. A slightly lower offer with a bigger down payment could be more appealing.
Have your agent show the components of each offer on a spreadsheet. Here are some conditions, other than price, that you will want to consider and possibly renegotiate:
■ Closing date
If closing at a particular time is important to you, make sure the date on the offer aligns with your desired one.
You may find that one buyer wants one, but the other has offered to waive it. What do you do? This is something to discuss with your agent, but it’s often in your best interest to take the lower offer without the home inspection contingency. If the inspection is waived, there will be no further negotiation prior to signing the purchase and sale agreement. If it is not waived, but you see the phrase “inspection for informational purposes only,’’ the buyers still will be having an inspection, but are using language to suggest that they will not try to renegotiate afterward. This however, is not always the case, and creates uncertainty for the seller. Also, by the time this happens, your property could be off the market for up to 10 days.
■ Cash or no financing contingency
Most sellers believe a cash offer is much better than a financed one, and many times it is. A cash offer may come in lower, however, because some buyers rationalize that if they are paying cash they can offer less. With a cash offer, your agent must make sure that the buyers submit a proof of funds, such as a recent letter or statement from a financial institution.
In my opinion, waiving the financing contingency can be just as attractive as a cash. This has become quite common. Most buyers cannot afford to pay cash, but they know their financing will be approved, and they want to do everything they can to make their offer as attractive as possible. This also means that they would forfeit their second deposit (typically 5 percent) if the financing does not come together.
Waiving this contingency also includes forgoing the bank appraisal (unless they have stated otherwise). If you decide to accept one of these offers, your agent should call the buyer’s lender to make sure the buyer has secured financing if the appraised price comes in lower.
■ Escalation clause
Such a clause states that a buyer will pay a certain amount over the highest bona fide offer that does not contain a home sale contingency. Not all agents use these, but I think they are a great way for buyers to ensure their bid stands out in a competitive situation. It’s also a way for a seller to make more money. Let’s use $5,000 as an example. Once all offers are reviewed, the seller’s agent contacts the agent who submitted an escalation clause, forwarding him or her the highest offer (and redacting all personal information). The buyer has a certain amount of time, normally half an hour, to accept or reject the highest bid, plus the $5,000 escalation. So if the highest offer is $525,000, the buyer must agree to $530,000. An escalation clause also permits the buyer to say no if the highest offer is too high.
Whatever you end up doing, remember that every term is negotiable — and as a seller you are in the driver’s seat in this market. A sharp seller’s agent will compare and leverage all offers to achieve your desired pricing and terms. This is the fun part, so enjoy.
Original Date: May 10 2018
Original Author: Marjorie Youngren
“It really depends on the type of buyer you are,” says Robert Garay, a broker associate and team leader of the Garay Group at Lifestyle International Realty in Miami.
For instance, a Federal Housing Administration (FHA) loan only requires 3.5% down. If either you or your spouse served in the military, you’re likely to be eligible for a Veterans Affairs (VA) loan, which can be approved for 0% down. The same goes for United States Department of Agriculture (USDA) loans.
And if you’re a qualified buyer, you can get approved for a conventional loan with less than 20% down, but there’s a catch: You’ll be on the hook for private mortgage insurance, or PMI. PMI is paid directly to your lender, not toward your principal. Think of it essentially as insurance you pay to prove to the lender you won’t default on your loan.
Myth No. 2: Paying mortgage insurance is smarter than paying a bigger down payment
Perhaps that mortgage insurance seems like a small price to pay in order not to deplete your bank account and win the house. So what if you make some additional payments for a while?
It might not be a big deal, but you’ll want to calculate what you’ll pay in the long run. Take, for example, conventional loans. If you put less than 20% down, you’ll get stuck with PMI, but only until the principal balance reaches 78% or less of the original purchase price.
FHA loans, on the other hand, require mortgage insurance for the life of the loan. That means you’ll be paying an extra monthly fee for as long as you live in the home (or until you pay off the mortgage).
Before you brush off mortgage insurance, compare your options—and know that paying less upfront could mean paying much more over the life of your loan.
Myth No. 3: Cash is king
If you’re shopping in a competitive market, you’ve likely heard horror stories about first-time buyers getting snubbed over investors or all-cash buyers. If you’re working with a loan and a small amount down, it might seem like your chances of getting picked over the other guys are slim to none.
There is some truth to this belief. Cash offers offer one big benefit to a seller: They’re guaranteed to close on time with no loan approval hiccups.
But on the flip side,“That myth assumes that sellers care most about a fast and certain close, and that’s not always true,” says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.”
Often, if you make the bigger offer, or you write a killer personal letter that resonates with the seller, you stand a better chance of getting approved over an all-cash offer.
Fleming’s seen it happen: “I’ve actually beat out all cash offers with 10% down because our offer price was a little higher,” he says. “I’ve also had deals where we were competing against a higher cash offer and the seller took ours because the buyers were a young family wanting to raise their kids in the home—and that meant something to the seller.”
Myth No. 4: Down payment assistance is easy!
We hate to burst your bubble—or discourage you from trying to get down payment assistance if you qualify—but finding, applying, and getting approved for help isn’t always easy.
First, there are no national, or even many state-run, assistance programs.
“Pretty much every program is locally run, sometimes by county or even by city,” Fleming says. You can check the Department of Housing and Urban Development’s website for a smattering of state-run “homeowner assistance” options, but you’ll have to do some digging.
And then there’s the other rub. “You have to be under a certain income to qualify, usually the median income in the county,” Fleming says.
Some programs may make special exceptions—say, for single parents—but in general, income is going to be a big factor.
For example, to be eligible for down payment assistance in Grand County, CO, applicants must work a minimum of 32 hours per week in the area and meet income limits. Nevada’s “Home Is Possible Down Payment Assistance Program” has a cap on income, credit score requirements, and the cost of the home bought. In Tamarac, FL, applicants must meet income requirements, wait until an open enrollment period and then get picked from a lottery system.
Still, if you think you might qualify, call your local housing authority office—it can usually point you in the right direction.
Myth No. 5: You shouldn’t put more than 20% down
Let’s say you’re lucky enough to have saved more than 20% down. Odds are good some well-meaning friend is going to tell you to put only 20% down—no more, no less. After all, now that you’ve successfully avoided PMI, why fork over more cash than you have to?
A couple of reasons, Fleming says: First, a higher down payment could signal to your lender that you’re a trustworthy borrower and get you a lower interest rate on your mortgage. Plus, the more you pay upfront, the less you’re borrowing—which means lower mortgage payments.
But you’ll have to put down at least 5% more to see that difference, according to Fleming.
“Your interest rate drops a little more with 25% down, and even more with 35% down,” he says.
Compare your options to see if it makes more sense to pay the extra down or to keep that money in investments that can work for you.
Myth No. 6: You can take out a loan for a down payment
Truth: There’s nothing wrong with getting help with your down payment, but it has to be a gift. If a lender suspects the money might be a loan, repaying said loan will be factored into your mortgage approval amount and you’ll qualify for less than you might have wanted.
In order to prove it’s a gift, you’ll have to get a letter from the gifters, swearing that they don’t plan on asking for the money back. And don’t try to game the system—lying on a mortgage application is a felony.
Original Source: https://www.realtor.com/advice/finance/down-payment-myths/
Original Author: Angela Colley
Original Date: April 26 2018
Buying a home is infinitely different than any other type of purchase you will ever make. With an investment this large, you not only need to rely on the advice of industry experts, but you’ll also need to do your own due diligence. The more you know, the less stressful the experience.
Here are some of the top things REALTORS® wish buyers knew about the homebuying process.
Your REALTOR® is Your Trusted Partner
When you choose to work with a REALTOR®, their fiduciary responsibility is to you. This means you have an experienced professional looking out for your best financial interests, and someone who subscribes to the National Association of REALTORS® strict Code of Ethics. Your REALTOR® is contractually bound to do everything they can to protect you while helping you find the home of your dreams.
REALTOR® Dawn Brewster, with RE/MAX Real Estate Professionals, says her goal is to build and maintain a strong partnership with all of her clients.
“I am deeply committed to my buyers and am passionate about educating them on the market and ensuring they are properly prepared,” she said. “I want to earn my clients’ trust so they can be open with me as far as what are looking for, what they can afford, and what their goals and expectations are. That honest, two-way communication is critical to the process.”
Pre-Approval is a Must
Most REALTORS® won’t even begin showing homes without a pre-approval letter. There are several reasons for this that benefit both the REALTOR® and the buyer. For one, a pre-approval letter provides proof of a buyer’s ability to obtain financing, and also a price range a buyer should stay within. This saves both parties a lot of time and frustration during the home search.
Brewster says this letter is an important first step for every buyer because it also strengthens their negotiation ability.
“This market is moving very quickly, and there is a lot of competition,” she said. “When I submit an offer for my client I need to have a complete package, and that letter is an important piece. In fact, many sellers won’t even entertain an offer without it.”
Every Home Has Issues
Today’s buyers are busy and most don’t have the time, energy, or finances to take on a fixer upper or a large remodeling project. While “move-in ready” may be on every house hunting wish list, Brewster says buyers need to be open-minded.
“As a homeowner, projects and repairs come with the territory,” she said. “So during your search, focus on big-ticket items, like the roof or the windows and try not to get too caught up in the little things. I have seen buyers walk away from some great properties over something as small as a paint color, which is really a minor fix.”
Buyers should also be prepared for the inspection process, keeping in mind that there will rarely be a perfect report. Even a brand new home may have something worth noting, so again, the focus needs to be on any major items in the report that are worth negotiating.
Always Think About Resale
When you’re searching for a home, especially if it’s your first, you are probably not thinking about the day you will sell it. But, any experienced REALTOR® will advise a buyer to always keep resale top-of-mind.
To maximize your value and ensure you are making a wise investment, pay attention to things like location, floorplan, number of bedrooms, storage and closet space, and the functionality of the kitchens and bathrooms.
Not Everything is as Simple as it Seems on TV
Real estate reality shows continue to top the ratings, but rookie buyers shouldn’t believe everything they see on TV. While these popular programs can make the buying or remodeling process seem pretty simple, there is much more going on behind the scenes that gets left on the cutting room floor.
But that doesn’t mean you should stop watching. Home improvement shows have provided buyers with great design inspiration and house hunting education. So, jot down your ideas and questions, and then rely on the professionals for sound advice.
Original Date: April 19 2018
“When we talk to clients about the deadly mistakes home buyers make when purchasing a home, No. 1 is buying a home without representation,” says Brian Cournoyer, a Realtor® with DeSelms Real Estate in Franklin, TN.
First, it’s important to know that you won’t save anything by skipping the buyer’s agent, because that cost isn’t on you. Typically the seller pays the commission for both the seller’s agent and the buyer’s agent.
And if you consider yourself a master negotiator, or think you can search for homes just as well as the next guy, know this: Agents have a host of training and tools designed to find the right properties and get you the best deal.
“Everyone thinks they can go online and pull up comps, but they don’t have access to all the real-time information that agents do,” Cournoyer says.
2. Assuming you can get a deal on a short sale
OK, so most sellers are in the driver’s seat. But what about sellers who need to offload their home fast? There’s gotta be some of those out there, right?
Jen Birmingham, a Realtor® with Coldwell Banker in Petaluma, CA, says one of the biggest mistakes she sees is people counting on short sales to snag a bargain.
“Because home values are way above where they were when a lot of people were underwater, short sales are few and far between right now,” she says. “Buyers need to know that what was working six years ago is no longer applicable.”
3. Making big compromises just to score a deal
Buying a home that doesn’t have enough bedrooms, is located two hours from your work, or needs a mountain of money to make it livable is no bargain, even if its list price is far below your budget.
The trouble is, in a hot market, buyers often ignore these blazing-red flags, Birmingham says.
“What I see is a lot of people wanting so desperately to get into the market that they’re willing to make compromises that may have originally been deal breakers,” she says.
Think carefully about your must-haves, and do your best to stick to the list.
4. Hiring the cheapest inspector, or none at all
While it might seem economical to skip a professional home inspection, be aware that what you save now you’ll probably pay for later, Cournoyer says.
In older homes, an inspector can discover problems such as termite infestations or crumbling foundations. Even for new builds, it’s wise to hire a pro who can spot material defects or unfinished work in out-of-the-way areas such as crawl spaces or roofs.
“For instance, we have some pictures taken by an inspector that we show clients, where builders left a sheet of 4-by-8 plywood over the top of the chimney,” Cournoyer explains. “If we hadn’t had that inspected, this house may have burned down when they built their first fire.”
And there’s a double whammy: Forgoing an inspection also means you lose the ability to renegotiate if, say, you notice evidence of a leaky roof during the final walk-through.
5. Requesting an endless list of inclusions
Back when buyers held court, sellers routinely ended up including major appliances and other household goods in the contract. Anything to seal the deal, right? Well, those days are long gone, Cournoyer warns.
“Buyers tend to lose touch with reason a little bit, and think they should get everything,” he says.
Want to win that house? Make your asks equal to the price you’re offering.
“If you want to offer up a whole ton of money, you can be a little more high-maintenance,” Cournoyer says. “But when you’re out there searching for a bottom-of-the-barrel deal, you’d better just be asking for the house and that’s it.”
6. Insisting on unreasonable repairs
Certainly, if the home inspection turns up a major issue requiring immediate attention, buyers should ask that a repair be done prior to closing. But don’t assume a seller needs to revamp the entire property or make cosmetic changes.
“I had an experience recently where the buyers wrote out a huge laundry list of requests for the seller,” Birmingham recalls. “It was a really nicely flipped property, yet the buyers were still asking for more customization. The seller had put on a new roof, and they wanted two skylights installed.”
When Birmingham suggested this could anger the seller and limit their chances of getting the home, the buyers wouldn’t budge. Guess what? They didn’t get the house.
“The seller had three other offers, and didn’t want to deal with my buyers because their demands were so off the wall and unrealistic,” she says.
7. Making a lowball offer on a home that’s been languishing on the market
Some buyers figure that any listing that’s been up for more than a couple of weeks must have a desperate seller behind it. But, Birmingham notes, a low offer will not only cost you credibility in the seller’s eyes, but could also spark a bidding war.
“Usually when a house is on somebody’s radar as a bargain, there’s somebody else that has the same feeling at the same moment,” she explains. “So you’ll usually still be in competition in a multiple-offer situation.”
Speaking of which…
8. Employing the wrong strategy in a multiple-offer situation
When you’re one of many offers on the table, it’s important to stand out in a positive way, Cournoyer says.
“Agents have a few tricks we can put in the offers that help us rise to the top of the pile,” he says. “Yet we see buyers who don’t submit clean offers—making (contingencies) on a home sale, for example—which clutters up a contract.”
Birmingham agrees that ignoring your agent usually means missing out on a house.
“In most situations, if the house is priced properly, a good Realtor is communicating with the listing agent about how many offers are coming in,” she explains.
“Buyers really have to be ready to step up with an above-asking offer if they want the house,” she adds. “Sometimes, it takes a few losses for buyers to understand that process.”
Original Date: April 4 2018
The other day I received a call about a listing of mine from a buyer named Kevin. He requested a showing as soon as possible. Unfortunately, even though the home had been on the market only a short time, it was already under contract.
Kevin was clearly disappointed with this news.
“I assume you are not working with a buyer’s agent,’’ I said.
I was right.
“Since we only just started looking a few months ago,’’ he said, “we didn’t want to commit to working with an agent yet.’’
News flash: The most important time to start working with a buyer’s agent is at the very beginning of your search. If Kevin had been working with an experienced buyer’s agent, he would not only have been informed about my listing more than a week ago, but also educated on how the home-buying process works. He would have known that timing is key, because of the limited number of homes on the market and high demand.
His buyer’s agent would have also told him that offers were due at noon on Monday, two days before he called me. A good buyer’s agent could have been the difference between Kevin missing out on this house and owning his dream home.
Like any important consideration, research and education are essential. Buying a home can be very exciting, but also extremely overwhelming. It is important to understand how the process works. What baffles me is that many people will spend hours, even days, researching refrigerators or coffee makers, but when it comes to the largest investment of their lives, a house, they don’t take the time to find someone who can help guide them through this complex process. Although the Internet can be a great resource, it’s not a substitute for working with an experienced agent. The job of a buyer’s agent is to protect their client’s interests.
A buyer’s agent’s first step is to set up a meeting to explain everything involved with a home purchase, beginning with making sure you speak with a lender to understand what you can afford. I cannot tell you how many buyers are out looking at houses every weekend, not even knowing how much they can really afford. That’s a waste of time.
Experienced buyer’s agents explore your motivation for purchasing by asking lots of questions: How far away is your day care? How long of a commute can you tolerate? They will ask whether you prefer to be walking distance from the center of town or out in the privacy of the suburbs. They will ask what your nonnegotiables are when it comes to choosing a home. Based on your answers, your agent will make suggestions as to which communities and what types of homes might work best for you. They will listen and help you find an area that will satisfy your needs and financial limitations. They will educate you on what you can get for your money in each community, and once you find a home, will advise you on how to craft a strong offer. They handle all of the negotiations and the paperwork right through to closing. Your agent will also have a list of trusted service providers they can recommend, such as inspectors, lawyers, lenders, electricians, and movers.
Buyer representation will make a tremendous difference in your experience. Unlike Kevin, who missed the offer deadline, you will have all of the information you need at your disposal — when you need it. Without an agent, you may miss out on what could be the perfect home for your family. Don’t be like Kevin. Contact a good buyer agent to help you.
Original Author: Marjorie Youngren
Original Date: Mar 28 2018
Home buying trends: Millennials are more conventional than you might think
Conventional loans among Millennials hit two-year high
Millennial home buyers seem to have pretty good credit. According to new data, not only are their credit scores rising, but they’re also qualifying for more conventional loans – products that are traditionally more difficult to get without great credit.
Getting more conventional
According to the most recent Millennial Tracker from Ellie Mae, Millennials are increasingly choosing conventional loans over FHA, VA or other loan options. In fact, conventional loans made up 67 percent of all Millennial closed loans in January – the highest share in two years.
FHA loans only accounted for 32 percent of all Millennial loans for the month. Joe Tyrell, Ellie Mae executive vice president of corporate strategy, said this trend has been gaining speed.
“Historically we have seen Millennials look to FHA programs to help address their home buying needs, but in the past two months, FHA loans have represented less than 30 percent of the total loans for Millennials,” Tyrell said. “We view this as an indication that more Millennials are qualifying for conventional mortgages.”
Other Millennial home buying trends
Refinance loans were also up among Millennials in January. Refis accounted for 18 percent of all loans for the month – up from the 15 percent share seen since October. Millennial FICO scores rose too, increasing from 722 to 723 for the month.
The top three spots for female Millennial buyers were all in Wisconsin: La Crosse-Onalaska, St. Cloud and Green Bay. For male Millennials, it was Fairmont, West Virginia; Owensboro, Kentucky; and Macon, Georgia.
Women were more likely to use FHA loans. Thirty-two percent of women chose FHA financing compared to 27 percent of men.
Get today’s mortgage rates
Are you a Millennial ready to embark on the home buying journey? Shop around and see what mortgage rates you’d qualify for today.