May 16, 2021

Tough Time For First Time Home Buyers

First time home buyers trying to buy a home for little or nothing down are having a tough time.  Sellers in markets with little or no inventory will not accept offers with little money down because in some cases the home may not appraise for the sale price.  In that instance, the buyer would have to put more money down to get a mortgage.  First time home buyers attempting to take advantage of no money down in the case of a VA mortgage or 3% down in the case of an FHA loan are at a real disadvantage in markets where in some cases homes are selling for more than the list price.    

Certainly, if there are multiple offers for a home, it could end up in a bidding war where money talks.  Obviously the best offers are those with all contingencies waived that have sizeable down payments, or are all cash.  There is no way a first time home buyer can compete in that real estate market.  Perhaps, using 401K money or some other savings will be needed to buy a home in today's markets.  If the first time home buyer has no access to more money, it could be that the timing is just not good, so renting until there is a down market is the only alternative.  

Or, moving to a location perhaps further out of town where perhaps the market is not as hot as is the case today in many areas.  A first time home buyer needs a Plan B because in many real estate markets trying to buy a home with little or nothing down just will not work.