First Time Home Buyers: 5 Tips and Myth Busters
by Mario Fermin, MCNE, GRI
Cook & James is committed to building relationships in the community and wants to spotlight our partners -- realtors, brokers, agents, and other industry experts – as guests on our blog. Previous guest posts have featured Judge Parker, an award-winning Atlanta south side real estate professional who is also a sought-after trainer, and Tim Hur, who holds leadership positions with National Association of REALTORS® and Georgia Association of REALTORS®, and is Managing Broker for Point Honors and Associates, REALTORS®. Today, in the third of an ongoing guest blog series we feature Mario Fermin, a bi-lingual agent and broker, sharing his thoughts and expertise for first time home buyers.
I’ve been helping clients find their dream homes for nearly 10 years and I see two overarching themes: the lack of information about the many options are out there for first time home buyers and their misconceptions about the requirements for home ownership.
For a long time I specialized in foreclosures, short sales and REOs – real estate owned properties -- but those deals are no longer as commonplace since the financial upswing. When I began in real estate on the north side of Atlanta, I would help with about half a dozen REOs a year, but now with the improved economy and reinvigorated housing market, I barely see any.
However, although the market is better, many first time buyers still don’t think they can qualify to own and are not widely knowledgeable about requirements of the many home buying options through HUD (Department of Housing and Urban Development), veterans loans, and programs through NACA (the Neighborhood Assistance Corporation of America). These “lesser known” programs can save first time home buyers a significant amount of money and get them into their dream house sooner than they think.
#1 - Just $100 Down
It sounds too good to be true, but there is a program through HUD where a home buyer can put as little as $100 down to buy their first home. You must qualify, which isn’t always easy, and you must use FHA financing to purchase the home. That being said, of course, the more money you put down saves money in the long run. But to some people $100 down to get out of the renting rat race can be worth it – and many don’t know the program exists.
The usual down payment for an FHA loan is 3.5 percent but the government offers this extremely low amount for qualified individuals because it wants to move foreclosed home fast and get them occupied by eligible buyers, further improving the housing climate for all involved.
#2 - 100% Financing for Veterans
Everyone wants to thank a veteran, but many people don’t know about the 100 percent financing option available to them. Now that’s gratitude!
We hear about homeless veterans often, and many housing programs exist to give them a leg up. This 100% financing is different and I don’t think many members of the military are aware of the many options available to them in return for their selfless service – or the service of their spouse.
Veterans should thoroughly research and consult with experts to determine the appropriate program for their personal situation, whether active duty, retired, discharged, Army, Navy, Air Force, Marines or Coast Guard.
#3 – HUD Store Dot Com
The Department of Housing and Urban Development (HUD) has many programs but in my experience one relatively unknown tool is a website that lists all foreclosed homes by state. It’s a robust means to allow searches by state, county, city, price range and more.
Homes listed here are all foreclosed HUD homes that need few or minor repairs and are open for bidding at a set date. Typically, the bidding process can get competitive, so if you see there are a lot of inquiries, you may want to set your bid a bit higher to increase your chances of success. The site notes the status of each home and the timeline, and potential buyers can visit the properties almost as often as they’d like.
The homes listed on HUD Store dot com still have to appraise by the FHA (required lender) and they typically take a longer period of time than a home on the “open market” from accepting the contract to closing on the home, usually 45 days.
#4 – NACA (Neighborhood Assistance Corporation of America
This is quite possibly the least known resource for first time home buyers, in my estimation. This non-profit community advocacy program exists to build strong healthy neighborhoods nationwide through affordable housing. NACA helps working people and those with poor credit. Features can include no down payment, no closing costs, no fees, no “perfect credit” requirements and below market interest rates.
Of course, potential homeowners will need to carefully research and consult experts, but I have seen many first time buyers realize success with NACA and it’s a top notch advocacy group with which to work.
#5 – Every Situation is Different – Chart Your Own Course
Many first time home buyers have a misconception that they have to have a 20 percent down payment because that’s what they’ve always heard. Some even think they have to pay the entire cost of the home because they heard a friend talk about it one time. This simply isn’t true. No two situations are alike. For some, it makes more sense to put less money down and use those funds toward kitchen updates, a bathroom remodel or an addition. In fact, if you’re buying a home for the second time, it’s quite conceivable you could have a totally different scenario than when you made your first home purchase. Keep your options open.
I encourage all home buyers – but especially first timers – to consider all possibilities. Do the research, run the stats, take time for your due diligence and talk to the experts. In my experience, being mindful of these lesser known choices and dispelling a few myths and misconceptions can offer hope – and spark a few ideas – to give first time buyers that jump start toward the home of their dreams.
Mario Fermin has been a real estate agent since 2009 and became a broker in 2014. Bi-lingual in English and Spanish, he is a member of the Northeast Atlanta Metro Association of REALTORS (NAMAR) and he is a member and current Georgia Association of REALTORS® director of the National Association of Hispanic Real Estate Professionals. He is a managing broker for Best Source Realty, LLC and holds an MCNE (Master Certified Negotiation Expert) and a GRI (Graduate Realtor Institute).