Charleston SC Real Estate: Buyers Only Need 3% Down Payment
In my last couple posts, I looked at current conditions in the national and Charleston real estate market that indicate there is not enough supply of homes to meet the demand. Buyers are out in full force early this year, a continuation from the end of 2014.
Typically, Spring is the buying season. However, buyers aren’t waiting for Spring to come. As a result, sellers shouldn’t wait for Spring to list. I also showed what factors were driving this influx of buyers.
In today’s post, I want to highlight something else that is keeping more prospective buyers from becoming actual buyers.
There was a recent survey by Freddie Mac that polled renters to find their attitudes towards home ownership.
The majority saw the advantages of home ownership over renting.
There were many financial reasons, the key one being the fact that rents go up over time, but with a mortgage, your housing payment stays the same.
An interesting statistic from that survey was the number of renters that wanted to buy a house in the next 3 years. This was broken down by age groups:
In the survey, renters gave many reasons they wanted to own their own home.
However, the survey also found one big obstacle holding them back: the down payment.
Or, the misconception that they needed a large down payment.
It is important to get the word out there that needing a big down payment is not necessary to purchase a home.
This is a large segment of the market that could have a huge impact on the national market, as well as the local Charleston SC real estate market.
It would be a shame that so many could miss out on their dream because they do not understand that a large down payment is not necessary.
Plus, with interest rates near their historical lows and prices continuing to appreciate, this group of potential buyers could miss out on a great time to buy.
A recent survey found this be true across many age groups.
The reality is that you only need 3% down for an FHA loan, and usually only 5% for a conventional loan.
VA loans still allow for 0% down. Additionally, FHA down payments can be gifted to the buyers from family members.
The Government wants people to buy homes.
Down payment is a big issue for buyers. Another recent survey showed that even if interest rates increased by 2%, the down payment would be a bigger factor preventing would be buyers from buying.
Another misconception among buyers is interest rates. Many feel that they “missed” out on the historical low rates we saw in 2012 and 2013.
However, rates are still close to their historical lows, and are lower than any other of the previous decades.
Just how big of an impact could these buyers make?
The National Association of Realtors projects that there could be an additional 90,000-140,000 more home purchases if the buyers simply understood the facts.
If you are thinking of buying or selling Charleston SC real estate, then bee sure to visit my Pam Marshall Realtor website.