June is National Homeownership Month!

A FOUR-POINT STRATEGY TO REVIVE HOMEOWNERSHIP

It’s not looking good for homeownership these days. According to the U.S. Census Bureau, 63.7% of households owned their homes at the end of 2016, down from a peak of 69.2% in 2004. While there have been small increases in recent quarters, the homeownership trend since the financial crisis continues to veer downward. We need to reverse this pattern, and these four strategies will help.

First, we have to demystify the process. 

More than two-thirds of adults in an Oct. 2016 national household opinion survey from NeighborWorks America described the homebuying process as complicated. Our network’s counselors report that a common refrain from customers they help to achieve homeownership is, “I never thought I could do this.” Because the purchase process is so complex, many potential homeowners don’t even try, essentially self-selecting out of their piece of the “American Dream.” 

Increasing the homeownership rate in New Haven, CT will energize the local economy and create jobs from construction to retail.

Second, we have to return to rational credit standards.  

 

We return to the loose underwriting of the early 2000s. However, right now, credit standards are too tight and thus reduce the prospects for homeownership for many. A recent article by the Urban Institute noted that innovations in credit scoring practices could help up to 3 million first-time homebuyers across the country. The lending industry must seriously pursue such modifications.

Third, we need to do a better job in reaching out to low- and moderate-income consumers.

These are the first-time buyers of the future and they are unsure about the path to homeownership. Nonprofits housing organizations have had a “field of dreams” mindset: if we’re here, homebuyers will find us. That’s not working. The NeighborWorks survey mentioned above also found that fewer than 10% of consumers think of nonprofit’s like Neighborhood Housing Services of New Haven first when considering how to achieve homeownership. Our organization and others working to increase homeownership, especially among first-time buyers, need to behave more like businesses and seek out these types of customers. Word of mouth isn’t enough.

Fourth, we must overcome financial obstacles. 

Home prices are increasing in nearly all markets. Here in New Haven, the median price is approximately $160,800, and the stereotypical 20% down payment is out of reach for most first-time buyers. However, the truth is, consumers don’t need a 20% down payment to purchase a home these days. In some cases, just a 3% down payment is required. However, not every lender offers flexible mortgages. 

By working with Neighborhood Housing Services of New Haven and other housing nonprofits, consumers will learn about the lenders who offer 3% down-payment mortgages. In addition, they also will be made aware of the potentially millions of dollars in down-payment assistance funds available in this community and others. The NeighborWorks survey showed that only one-third of consumers are aware of down- payment programs for middle-income buyers. 

While there isn’t an unlimited supply of down-payment assistance, if more consumers knew to seek it and sought information from nonprofit organizations, the homeownership rate would increase. That’s good for individuals, families and Greater New Haven.

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Five Tips to Empower Renters

Five Tips to Empower Renters (from NeighborWorks America and NHS of New Haven)

Renter households increased from 34 million in 2005 to nearly 43 million in 2015. With the probability that more families will seek this housing, planning ahead can make the process easier. Working with trained staff at NeighborWorks organizations such as NHS of New Haven can help people become informed consumers of rental homes. 

Following these five tips can make renting a lot less stressful: 

1. Avoid rental listing scams.Scammers often advertise rentals that don’t exist or aren’t available, often known as phantom rentals, to trick people into sending money before they find out the truth. Signs you may have encountered a scam include a person telling you to wire money or they want the security deposit or first month’s rent before you’ve met or signed a lease. Report a scam by contacting local law enforcement and the Federal Trade Commission (FTC).

2. Get your finances and credit in shape.

Protect your money and pay as little as you can for the apartment you want by strengthening your credit. Nearly half of renters are paying more than 30 percent of their incomes in rent, according to arecent report by the Joint Center for Housing Studies of Harvard University. Financial counseling helps individuals strengthen their credit and establish savings goals. These habits can help you save enough money for a security deposit and help to improve your overall credit score. A good credit score is important because most landlords use a credit check to vet potential renters. Many NeighborWorks organizations offer financial coaching.  

3. Consider renter’s insurance.
Avoiding scams and strengthening your credit are essential. It’s also important to protect your belongings from loss or accidental damage.
Renter’s insurance protects the valuables inside your home whether you're living in an apartment or renting a house. If there were an incident like a fire or water leak, a landlord's insurance would cover the building itself but you would still need to replace your own belongings if damaged.

4. Select a moving company carefully.If your friends or family are not assisting with the move, research moving companies and find a trustworthy one. Read online reviews and check social media, along with asking friends and family for a recommendation. The right moving company can make your relocation go smoothly. Get estimates from a few moving companies to compare prices.            

5. Decide between a large managed property or apartment complex, or renting from an individual landlord.
Do your research and determine which one is best for you. Read online reviews, and if possible talk to current residents and ask what they like and don’t like about the property. Be sure to know your rights as a tenant, which can vary from state to state.

Debunking Three Home-Buying Myths!

Debunking Three Home-Buying Myths! 

 

According to research from NeighborWorks America, 90% of consumers consider owning a home an important part of their American Dream. But the homeownership rate is falling nationally, and buying activity is simply not where it should be. That's because three major misconceptions about what it takes to become a homeowner – down payment, credit and lender approval – are combining to hold back many qualified consumers from taking the first steps towards that dream. Mortgage rates have been consistently low for a while now, but many potential homebuyers are on the sidelines because they believe the wrong facts about homeownership and what it takes to be a homeowner. 

Myth #1: "I need to save 20 percent" 
Reality: Many potential homebuyers believe they need a 20% down payment to qualify for a mortgage. Nothing is further from the truth. Lenders throughout our community have mortgages for people who have saved as little as three percent of the down payment. Importantly, there are special lending products in our market where a qualified buyer with only a three percent down payment may not have to pay mortgage insurance. Not everyone is eligible for these loans, but attending a homebuyer education workshop is the best way to learn what it takes to qualify. 

Myth #2 "I Need perfect credit" 
Reality: It's not necessary to have perfect credit to qualify for a mortgage. Although weaker credit usually means that a buyer may not receive the lowest mortgage rate available, the difference in rate typically doesn't slam the door on homeownership. Moreover, by attending the homebuyer education workshop, a consumer will learn how to most successfully find a mortgage lender that matches their credit profile. While perfect credit isn't necessary to qualify for a mortgage loan, homebuyer education will help a homebuyer manage their credit during the process. Lenders are checking credit practically up to the time of home purchase. By not paying attention to credit during this process – for example missing a single payment for 30 days – may severely damage a credit report. Homeownership counselors at NHS of New Haven work with consumers every step of the way.

 

Myth #3: "One lender said no, they'll all say no" 
Reality: Mortgage lenders are not all the same. One lender that says no, does not mean that all lenders will. The NeighborWorks survey found that most Americans are confident that they could find the mortgage that is right for them, but one-out-of-five are not confident at all, and two-thirds of consumers say that the entire home buying process is complicated. NHS of New Haven homebuyer education workshop is here to help make the process smoother, including helping a consumer find the lender that will help affordably get a home today and for the long-run.