Buying a Columbia SC home remains a dream for many people. Whether you are a young professional, part of a new family, or an empty-nester, the desire for permanence, peace of mind, and independence can be extremely motivating, in part because almost everyone considers these factors important for having a good quality of life.
When looking for a Columbia SC home, whether for the first time or not, many would-be homeowners finding themselves wondering: what kind of Columbia SC home can I actually afford and how do I find one that is affordable on my budget?
Determining a Budget for Your Columbia SC Home
You must take an objective look at your finances to understand exactly how much you can afford to spend on creating your perfect home.
You must look closely at all your debts, bills, and earnings, and that can be uncomfortable or even depressing, depending on your circumstances.
A good place to start is by talking to a financial adviser, loan officer, or other professional to get an accurate picture of your finances and potential budget for buying your Columbia SC home.
In the end, however, you should have a figure in mind in terms of the monthly payment you can afford. Remember the payment includes more than just the principal and interest associated with the home loan. You will also be paying property taxes, homeowner’s insurance, and possibly mortgage insurance, making the payment higher than you may initially think.
Finding an Affordable Columbia SC Home
In recent years, some of the best real estate deals have been on foreclosures and short sales. Foreclosures are homes sold by the bank holding the mortgage, usually due to non-payment by the owner. Sometimes, homes may be sold at auction by the state/city due to non-payment of property or other taxes. Foreclosures are generally sold well below market value, primarily to prevent the bank or other interested parties from losing even more money on the property. Lists of foreclosures can be found online or sometimes in local newspapers.
Short sales are similar, however, the list price of the home may be higher than a foreclosure. Keep in mind, many of these homes are not necessarily in good condition and may need work, either cosmetic or structural, to make the home livable or nice inside.
If you choose to purchase such a Columbia SC home, a property inspection beforehand can save you a lot of potential heartache. Replacing a roof, for example, generally costs thousands. Mold remediation is likewise expensive, not to mention hazardous. Homes for sale by-owner are likely to be affordable; however, the transaction itself can be much more difficult without having professional assistance working on behalf of both parties.
These reasons alone should be convincing enough to hire your own agent to look after your best interests in any purchase of a Columbia SC home.
Other Expenses When Buying A Columbia SC Home
Closing costs can be one major expense. Ideally, the seller should pay the majority of these costs. To avoid surprises, be certain to understand fully which expenses are your responsibility and which ones belong to the seller. High closing costs can represent a serious expense that could be unnecessary or at least negotiable.
The same goes for insurance. It is entirely possible to overpay for a policy that does not provide any additional benefits to you as the homeowner. You should get quotes from several insurance companies prior to choosing a policy. Do not skimp on coverage! Just make an attempt at getting what you need for an affordable rate through comparison shopping.
We have more articles to help in the process of buying a Columbia SC home over in our Columbia SC Home Buying Tips section of articles under the Columbia SC Real Estate Categories to your right.
Young, first-time Columbia SC homebuyers are becoming an increasingly rare site these days in the housing market.
According to the Census Bureau, the homeownership rate for the 35-and-under crowd fell to a 22-year low in the second quarter. This has some parents wondering whether they can, or should, help their kids buy a home.
Should You Help Children Become First-Time Columbia SC Homebuyers?
Parents have helped their children for decades with down payments and even loans. But recent economic and mortgage-market realities have made the question more acute. Whether you should step in is a question only parents can answer. Here are some considerations if you do decide to help.
Down Payment Assistance:
There are potential tax implications to consider. Individuals can currently make tax-free gifts of up to $14,000 per recipient. That means Mom and Dad could give as much as $56,000 to their child and a spouse before hitting the IRS's annual cap on tax-free giving. Make sure your child is married to qualify for that limit. Live in boyfriends/girlfriends don't qualify.
Anything above those limits requires reporting to the IRS. But you can certainly give more. The good news is you won't have to pay taxes until you bust through the lifetime gift exclusion, which now sits at $5.34 million, well above most people's worry limit.
Lenders will have specific guidelines for how to document and source gift funds. They'll also want to see in writing that this is a "no strings attached" donation, and not a loan to be repaid.
Depending on the type of loan and gift amount, children may need to contribute some of their own money to the cause to become first-time Columbia SC homebuyers.
Co-Signing:
Parents can also co-sign on a mortgage with their child, although we don't recommend it. Some loan types, like VA home loans, have occupancy restrictions, but there are plenty of options for co-borrowers who don't actually plan to live in the property full time.
Helping with a down payment is one thing. Co-signing on a loan exposes parents to significantly more risk when it comes to their credit and financial profile. A child who misses a mortgage payment or winds up in default could wreck their parents' credit for years.
No one expects to lose a job, get divorced or face some medical crisis. Anything that affects your child's ability to make good on their obligation means the full responsibility falls to you. That may or may not be financially feasible for some parents.
Parents as the Lender:
Parents with the liquidity for an all-cash purchase can opt to draw up their own mortgage and repayment plan, likely with the help of an attorney and a financial planner.
There are federal guidelines regarding interest rates on loans like this, which is all the more reason to consult financial and legal experts. This kind of arrangement can generate interest income for parents, while getting kids into a loan with a lower rate than they'll ever find on the market. It could be the only way for the children to become first-time Columbia SC homebuyers.
The Simplest Approach:
Although not necessarily feasible, paying all-cash is certainly the simplest way to go. No credit review, no checking where the down payment came from. All cash sales accounted for almost a third of all home purchases in June.
No matter which route you take, if helping your children become first-time Columbia SC homebuyers, we strongly recommend you seek legal counsel and advice when structuring any agreements.
Check out some of our other articles on becoming first-time Columbia SC homebuyers by clicking the Columbia SC Home Buying Tips link to your right under our Columbia SC Real Estate Categories.
Thinking of buying a Columbia SC home? You may be better making the decision sooner rather than later!
If you qualify for a mortgage and choose not to buy now, you will be kicking yourself a year from now.
Thanks to very low inventory, Columbia SC home prices are projected to increase by 6.3 percent through April 2015, according to a recent study by Corelogic, a leading global property information, analytics, and data-enabled services provider.
Just how much could that increase cost you? More than you might think. On a $300,000 house today, the same house will cost you $318,000 a year from now.
4 Reasons Why Buying a Columbia SC Home Now is a Smart Move
#1 – Buying a Columbia SC home will only become more expensive because of low inventory and rising demand. With a shortage of housing and rental units available, Columbia SC housing prices and rents have increased, leading to affordability issues. The good news is that this supply and demand issue will solve itself once more housing units are built to accommodate the population growth and young families looking at buying a Columbia SC home. The bad news is that it could take a while, and prices will climb until then. So now might be a good time to buy, before prices peak.
#2 – Buying a Columbia SC home will certainly cost more, even if prices don't increase, because of the Fed planning to taper off bond-buying in October. The Fed is now buying $25 billion per month, down from $85 billion at the peak. The end of the program, which was aimed to keep interest rates low, is expected to result in higher interest rates, and any increase in interest rates could create even less favorable conditions for buyers.
Rising rates can have just as big an impact on affordability as does rising prices due to low housing inventory. When mortgage rates increase, borrowers experience greater difficulty qualifying when they are wanting to buy.
While you've already missed the bottom of the market with home prices, interest rates are still very low. Don't risk rates going up, which can ultimately cost you big on your home's price tag.
#3 – Buying a Columbia SC home will continue to become less affordable due to the current economy's flat wages. If home prices continue to increase, housing could in theory become less affordable if your take-home pay doesn't keep up with its growth. Can you afford to wait?
#4 – Buying a Columbia SC home now rather than later will have you beating others to the punch who procrastinate and wait til later to buy. The pent-up demand of younger professionals, who moved back in with their parents during the recession, is about to explode. And as these young people move out and form new households of their own, they will drive up housing demand.
While the competition helps the overall home values in the area, it also inflates prices to the point where buying Columbia SC homes is no longer affordable for a large percentage of potential home buyers. It's only expected to get worse as more and more young professionals feel ready to buy, so it's a smart move to buy now and avoid the potential price gouging altogether.
Stay abreast of all the news that affects buying a Columbia SC home right here at our website. More articles can be found in the Columbia SC Real Estate section, or the Columbia SC Real Estate News section, both to your right under Columbia SC Real Estate Categories.
The younger generation of potential Columbia SC homebuyers are finding barriers to homeownership almost overwhelming. The lack of affordable homes, student debt, and unemployment, are keeping many of these young would-be-buyers either renting, or living with parents.
This inability for young Columbia SC homebuyers to get started as homeowners is taking some of the punch out of the housing recovery. Although “millennials,” or 20- to 34-year-olds, are starting to find jobs and move out on their own, most are becoming renters, not buyers. Many are starting families, which adds expenses to the monthly budget that can’t be allotted to a mortgage payment.
We’re at a point now where young people are starting to move out of their parents’ homes. But that’s only just begun over the past year or so. When young people start moving out of their parents’ homes, most will opt to rent first before they buy. The key thing about young adults is there still are a lot of barriers to homeownership.
It’s not just the limited inventory on the lower end, it’s saving for the down payment to qualify for the mortgage in the first place. It takes years of work to save enough for a down payment and qualify for a mortgage. And for young people who are just getting jobs now, they’ll be renting for awhile before they will even qualify to buy.
Student Debt Preventing Most Young Adults From Becoming Columbia SC Homebuyers
Student loan debt makes it harder to save for a down payment. What you might have been saving is instead going to pay back those student loans.
The new Qualified Mortgage rules take into account all of your debt (affecting) your ability to repay a loan. Student loan debt is yet another barrier to home ownership for young adults wanting to become Columbia SC homebuyers.
The good news for the Columbia SC housing market is that price gains are slowing down somewhat. In addition, the share of home foreclosures has gone way down as foreclosed homes have gone through the entire process and been sold off.
Potential Columbia SC homebuyers still trying to decide if it’s cheaper to buy than rent need to analyze their future situation carefully.
If you plan to stay put for seven years, itemize (your deductions) in the 25 percent (tax) bracket and get a mortgage of 4.5 percent, it’s about 15 to 25 percent cheaper to buy than to rent in Columbia SC . If you’re not itemizing and you only stay put for five years, buying is more expensive than renting in most cases.
So your personal circumstances matter. How long you stay put. Whether you’re itemizing. And also what mortgage you can get.
Check out some of our other articles and tips for Columbia SC homebuyers by clicking the Columbia SC Home Buying Tips link to your right under our Columbia SC Real Estate Categories.