The Columbia SC home buying market has been impacted by many potential first-time home buyers wrestling with repaying student loans. A recent BankRate.com survey revealed that young adults who would otherwise be prospective home buyers shelved their home search until their student debt is either reduced significantly or paid entirely. To make matters worse, many of these first-time buyers are under the mistaken impression that having student loan debt will prevent them from obtaining a mortgage.
Impact of Student Loan Debt on the Columbia SC Home Buying Market
The Amount of Debt Isn't as Important as Your Ability to Repay
Lenders look primarily at what a borrower’s debt-to-income (DTI) ratio is to underwrite a mortgage loan. A high DTI (over roughly 42%) may adversely impact your ability to obtain a loan, but anything less than that percentage should qualify you for a mortgage.
Your Credit Score is Only Impacted by Slow Payment History
Just because you may have student loan debt isn’t a negative mark against your credit score. However, if you have a poor repayment record, that will certainly lower your score. And because you will be required to pay a higher rate of interest if your credit score is low, your monthly mortgage payment will be more.
Repaying Your Student Loan Reduces the Amount of Money for a Down Payment
While you may have trouble saving money and reducing your student loan debt, you may still be able to qualify for a low-down payment loan. There are numerous programs available in the Columbia SC home buying market for first-time home buyers. You can research them online, or discuss them with your real estate professional or a mortgage lending officer.
With a little familiarization with the purchase process and some of its capabilities and requirements, there are opportunities for first time Columbia SC home buyers. So, don’t necessarily allow the repayment of student debt create a roadblock to home ownership. The two can co-exist.
Find more articles about Columbia SC home buying in our section on Columbia SC Home Buying Tips just below the Columbia SC Real Estate Categories to your right. And be sure to find us on Facebook and follow us on Twitter for more daily posts and tips about Columbia SC home buying.
Many Columbia SC home buying experts say that more people are waiting longer to purchase. This is especially true with the generation known as "Millennials," those in their late 20s to mid 30s. In fact, according to Zillow the average age of most first-time home buyers is 33, compared to 29 in the late 1970s.
An Inside Look at Columbia SC Home Buying
While the housing industry has been deemed strong and vibrant, and even though interest rates are low, many young Americans are reluctant to enter the Columbia SC home buying arena. Real estate experts say their hesitation to buy often is the result of concerns about increasing non-housing expenses in an uncertain and often volatile economy. Factors such as the high cost of health insurance and medical care, college expenses and rising student loan debt worry prospective home buyers.
Millennials aren't necessarily worried about higher home prices as much as they are these and other factors — including social influences. In many instances they are more apt to living in places that better suit their interests and lifestyle, regardless of whether they have to rent in lieu of building equity in a home of their own. The "double-edged sword, " however, is that higher rents in some urban areas can mean a greater difficulty in saving for a down payment when they're ready to enter the Columbia SC home buying market.
In addition, industry insiders say, some prospective home buyers see homeownership as a big risk. They grew up in a time where they saw friends and family adversely affected by the most recent housing collapse. Quite naturally, that event left an indelible mark on the psyche of many of them.
Another important factor preventing some from making Columbia SC home buying decisions is the job market. Most Millennials finished college during the recent recession of less than a decade ago. Many were unable to find desired employment and had to settle for whatever jobs were available. Mounting student loan debt and higher rents have forced many to plade their home buying dreams on the back burner.
One final reason some young people have eschewed the Columbia SC home buying experience is their ongoing love affair with "instant gratification." And while that would ordinarily indicate their desire to enter the market in search of a new home with modern conveniences and little maintenance, the cost of doing so is prohibitive. They are forced, therefore, to consider the typical "fixer-upper," which appeals only to a segment of their generation's population.
Find more articles about Columbia SC home buying in our section on Columbia SC Real Estate just below the Columbia SC Real Estate Categories to your right. And be sure to Find us on Facebook and follow us on Twitter for more daily posts and tips about Columbia SC home buying.
Entering the Columbia SC home buying market can be an interesting and rewarding opportunity. In order to fully understand the home buying process, it's important to spend some time doing research on the market. Here are a few points to consider as you prepare to embark on your house hunting safari.
Columbia SC Home Buying Tips
Gain knowledge through research.
No doubt you've heard that buying a home is probably the largest purchase the average person will ever make. As such, it's important to spend time becoming familiar with the homes in the neighborhoods you're interested in and their price ranges. Start your Columbia SC home buying research by viewing online homes for sale. In addition to the Multiple Listing Service (MLS) you can also check various real estate websites such as zillow.com or trulia.com.
Pay attention to the numbers.
Unless you've recently won the lottery, you will probably need to borrow the money to purchase your home. Many prospective home buyers think the mortgage loan process is a daunting task, but it's really not. However, if you're not prepared it can be a little challenging. The first step is to determine what you can afford to pay each month. Then you can use that monthly payment amount to back into a sales price you can expect to pay. There are online affordability calculators that will assist you in figuring what you can comfortably afford. The next step in the Columbia SC home buying process is to meet with a mortgage lender — perhaps several — to discuss what loan programs are available to best meet your needs. Plus, you'll want to become familiar with your credit score and discuss down payment options. After you choose a mortgage lender you can work with them to get pre-approved for a loan.
Seek professional help
Before you enter the Columbia SC home buying arena, you can save yourself a good deal of time, effort and maybe money by obtaining the services of a knowledgeable real estate agent. A good agent can quickly and efficiently find the homes in your price range and in your favorite neighborhoods. Your agent will arrange to show you as many houses as it takes until you find what you're looking for.
Equipped with the knowledge you gained from researching the market, fueled by the confidence of knowing what you can comfortably afford and accompanied by a qualified real estate professional, you're ready to make a purchase.
If you've followed the latest Columbia SC home buying trends, no doubt you've heard people say there's no better time to buy a home than now. With mortgage interest rates at very affordable levels, credit availability relatively high and down payment requirements low, it's a tempting combination for many renters thinking of entering the homeownership arena.
For most people, homeownership will be the largest purchase they will probably ever make so it's extremely important to examine the good and the bad of owning a home.
Columbia SC Home Buying Analysis
With the housing market crisis of a few short years ago still in the recent memory of many prospective homebuyers, it's only natural that renters are conservative, cautious and even slightly skeptical. Homeowners caught in the swift current of the market's disaster were swept away by having to quickly sell, move or lose their homes to foreclosure. And millions did.
Still, low mortgage rates make monthly house payments very enticing. So much so that in some markets it's less expensive to pay on a mortgage than to pay rent. It’s an attractive feature of the current Metro Atlanta home buying market. Yet, the conundrum continues: renting provides flexibility and a certain degree of freedom while homeownership can provide equity growth through real estate appreciation.
Why You Should Buy
1) Homeownership is at the heart of achieving the proverbial "American Dream."
2) With every monthly payment you own a little more of your home. Contrast this with rental payments for which you own nothing.
3) Historically over time, a homeowner builds wealth faster than a renter with net worths on average much higher than those of renters.
4) Although there are no guarantees and every home and market is different, statistics show that in the long term real estate values will likely rise or appreciate.
5) Homeownership provides tax benefits to those that choose to itemize deductions like mortgage interest and real estate taxes paid. This can make a huge difference in your tax bill, courtesy of participation in the Metro Atlanta home buying market.
Why You Should Rent
1) You can rent a home, condo or apartment with little, if any, investment in the property. Because you don't own the property, you're usually not responsible for repairs, maintenance or real estate taxes. They all belong to the landlord.
2) As the renter, or tenant, if the property loses market value it's of little or no concern to you.
3) Renting provides several lifestyle advantages that homeowners often struggle with. You have greater flexibility when it comes to relocating since you don't have to worry about selling your home.
So, What's Best For You?
The quick answer is it's all about your personal choice — and no one can decide which is best but you. If you like flexibility and think you may be moving to another city or state in a short period of time, then renting for now may be the better idea. But if you like stability and are ready to accumulate the potential home equity that may accompany owning a home, you should consider entering the Columbia SC home buying market.
See more articles pertaining to Columbia SC home buying in the Columbia SC Home Buying Tips section of our site below Columbia SC Real Estate Categories in the column to your right.
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In our Columbia SC Real Estate News for June 2015:
Buyers Still Positive On Columbia SC Housing
Buyer's views toward Columbia SC housing have not varied much over the past year, and they are still positive on homeownership as a good financial investment.
According the Federal Reserve Bank of New York's 2015 housing survey, U.S. households, on average, expect home-price growth to continue at a 4.4% pace for the next year, comparable to the average year-ahead expectation reported in last year's survey.
Last year's survey was the first in the series, with this year's survey getting administered to 1,205 U.S. heads of household in February 2015.
Survey respondents were asked for the current value of a typical home in their zip code, and what they expected the value of that home to be in one year and in five years.
With regard to longer-term expectations, the average expected annualized change in home prices over the next five years was 2.9%. These figures were slightly lower than the corresponding figures in the 2014 survey, where the mean expected annualized change in home prices over the longer horizon was 3.1%. Overall, respondents expected home price growth to continue, but at a slower pace at a horizon beyond one year.
The survey found that more than 60% of both renters and owners think that buying property in their zip code is a (very or somewhat) good investment, while only about 10% think it is a bad investment.
When it comes to renters answering this question, there was little difference in how they answered compared to 2014.
Here in Columbia SC, owners seem to have become more bullish since last year's survey. The proportion of owners who think that Columbia SC housing is a good investment increased from 58.5% in the 2014 survey to 63.2%, while the proportion thinking that Columbia SC housing is a bad investment declined from 11.9% to 9.8%.
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5 Things About the Current Columbia SC Home Buying Season
Many analysts are saying the Columbia SC housing market has normalized amid the pickup in activity since the recession doldrums. But all is not well for people trying to buy–especially if they're first-time buyers or on the lower end of the price spectrum. Here's what you need to know to compete as 2015's spring Columbia SC home buying season swings into the home stretch.
Inventory is Still Short
There are a lot of potential buyers in the market, but supply of available homes for sale is just not enough to satisfy demand, which is causing prices to be on the high side. As of the end of April, the number of available homes for sale—both newly constructed and previously owned—was well below the six-month supply considered a balanced market: 5.3 months for pre-owned homes and 4.8 months for new ones, according to NAR.
Prices Are on the Rise
Inventory constraints coupled with demand for real estate are pushing prices up. In many locations around the Columbia SC area, homes are selling at or above their list price. Don't expect the price gains to go away. Freddie Mac predicts an average home price gain of 4.5% in 2015 (on a national basis), while the National Association of Realtors is now forecasting that homes will rise by 6.7% this year.
Competition is Easing from Investors
For buyers the good news is, in 2015 there's less competition shaping up from investors in general. In the depths of the housing crisis, institutional investors were the big winners, snapping up single-family homes by the thousands. But they're less of a force today. In the first quarter of 2015, a total of 14,621 single-family homes were sold to institutional investors nationwide (defined as entities that purchase at least 10 properties per year), according to RealtyTrac. That's about 3.4% of all sales, down from 6.2% a year ago, and the lowest share for institutional investors in four years. All-cash deals are also down: of non-owner-occupied buyers, 44.7% were all-cash, compared to 61% a year ago and also the lowest level in four years.
Lower Priced Homes are Moving Fast
Markets are moving slightly faster than they were last year, so it's going to be a little more difficult overall for homebuyers to find a home they want in a reasonable time frame. Homes priced at the lower end of the market are moving quickest: only 50% of homes priced in the lower one-third were still on the market after two months, compared with 65% of higher-priced homes.
Financing Eases, But Mortgage Rates Are Rising
In the worst days of the housing crisis, it was tough to get credit. These days credit availability is at its highest level since the housing downturn, but watch out: interest rates have stayed at historic lows for months now, and Freddie Mac is predicting increased volatility. This past week, rates rose to the highest level in 2015. (See our next article below).
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Where Columbia SC Mortgage Rates Are Moving
With summer now in full swing (even though the calendar hasn't officially welcomed it yet), more potential home buyers are looking around. There is good news as Columbia SC mortgage rates remain at near historic lows, although they are rising, according to Freddie Mac.
Although existing home sales slipped 3.3% to a seasonally-adjusted pace of 5.04 million units, sales are up 6.1% on a year-over-year basis. The S&P/Case-Shiller 20-city home price index also posted a solid gain of 5% over the 12-months ending in March 2015.
The average 30-year fixed mortgage sits at 3.87 percent this week, an increase from 3.84 percent the previous week. The recent boost has brought Columbia SC mortgage rates to their highest levels of 2015.
15-year fixed rates this past week averaged 3.11 percent with an average 0.5 point, up from last week when it averaged 3.05 percent. A year ago at this time, the 15-year fixed rate averaged 3.21 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 2.90 percent this week with an average 0.5 point, up from last week when it averaged 2.88 percent. A year ago, the 5-year ARM averaged 2.96 percent.
1-year Treasury-indexed ARM's averaged 2.50 percent this week with an average 0.3 point, down from last week when it averaged 2.51 percent. At this time last year, the 1-year ARM averaged 2.41 percent.
However, a year ago, 30-year rates averaged 4.21 percent. The rise in Columbia SC mortgage rates was due to positive housing data as U.S. home sales climbed 7 percent in April. Overall lower mortgage rates are playing a role in bringing out local home buyers. The historic low for 30-year rates was 3.31 percent in November 2012.