We may be facing uncertain economic times, but what first-time homebuyers need to know right now is that owning a home still is a good investment for most people, there are programs that may provide assistance, and they never have to figure it all out on their own.
A Good Investment
Forbes recently asked financial and real estate experts if buying a home right now — “in a shaky economy and pricy market” — was a good long-term investment. Their answers were:
- 57% said “yes” buying a home is a good investment
- 38% said “it depends” on certain factors
- Only 5% said “no”
The “certain factors” include things related to the individual buyer like credit score, household income, debt, how long you plan to stay in the home, etc.
Real estate is generally considered a long-term investment. The longer you stay in the home, they more equity you build in it and the better investment it is.
Location of the home is also a factor. For example, home values in the Bay Area and Southern California raised dramatically in the past several years — increasing almost 20% in 2021 alone. (To put that in perspective, “normal” is closer to 5% – 6%.) Homes there may see a dip in value before rising again at a more normal rate.
Homes in more “affordable” locations — like the Central Valley — increased as well, but not quite as dramatically. Because of that, they also are not expected to see as large of dips.
LoanLimits.org reports that home prices nationwide are expected to slow down to an average increase of 5.7% annually through 2025. This makes real estate a safe investment rather than one of rapid growth currently.
What First-Time Homebuyers Need to Know Right Now About Programs to Help Them
Here’s a look at some of the programs first-time homebuyers have access to right now:
The Fresno County First-Time Homebuyer Program offers eligible first-time homebuyers “a zero-interest, deferred payment loan of up to 20% of the purchase price plus closing costs, with a minimum of $1,000. Repayment of the loan is deferred for 30 years or until the primary mortgage is paid off, whichever occurs first. The balance of the loan is due upon a change of title or non-occupancy by the borrower.”
The home being purchased through this program must be in an unincorporated area of Fresno County or in Fowler, Kerman, Kingsburg, Mendota, Reedley, or Selma. Purchase price and income limits also apply.
This loan has an interest rate of zero percent and doesn’t have to be paid back if the borrower continuously occupies the home as their primary residence for five years. The loan amount is for up to 10% of the purchase price of the home … basically giving these first-time homebuyers a down payment.
The Forgivable Equity Builder Loan program is offered by the California Housing Finance Agency (CalHFA) and may only be used with a CalHFA first mortgage. There are income limits that must be met in order to qualify. And this program is only available to first-time buyers.
The CalHFA MyHome Assistance program offers a deferred-payment loan for up to 3.5% of the purchase price to help with a down payment and/or closing costs. Interest rates vary depending on the borrower’s financial circumstances (including credit score), lender fees, and other factors. Income limits apply in determining eligibility for this program, and it is available only to first-time buyers as well.
The Fannie Mae HomeReady® first-time homebuyer loan requires just a 3% down payment, a credit score of at least 620, and a salary of no more than 80% of the median income in the area.
Similar to the Fannie Mae HomeReady® loan, the Freddie Mac Home Possible® loan also requires a minimum 3% down payment and a salary of up to 80% of the area’s median income. A credit score of at least 660 is required to qualify for the 3% down payment, but it may be possible to quality even without a credit history with a 5% down payment).
Professional Guidance is Advised
With so many options available — including some not listed here — it is advisable for young, first-time buyers to speak with both a realtor and a mortgage loan officer experienced with the programs.
You Don’t Have to Figure It All Out on Your Own
What first-time homebuyers need to know right now, really, is that they’re not alone. Whether it’s your first or your tenth real estate transaction, having a real estate professional on your side that you can trust makes all the difference.
The Foxen Team has helped a lot of people through the process, and you can count on us to help you, too.
Send us a message or call us at 559-490-0207 today to start the conversation.
And in the meantime, you may also find our FAQs for First-Time Homebuyers helpful in answering other questions you may have.