Wow! Another summer has come and gone. Here are a few updates from our team at CenTek Capital. As you have probably noticed, it’s a seller’s market. There is a housing shortage where increasing land values and the decreasing amount of new residential construction completions are contributing to higher price tags. In order to prevail in today’s competitive market, it is imperative that both first-time and experienced homebuyers are prepared to present an offer with minimal contingencies with as short of a time period as possible.
The overall U.S. population is expected to expand from 2014’s reported 319M to approximately 360M by 2030. There is a higher demand for homes as more seniors are living longer. Also, there is an increasing amount of young adults seeking higher education. Many Millennials who were once hesitant to buy homes because of student loan debt or who wanted career location flexibility are now entering the market in their late twenties and early thirties and as a result are more financially established than traditional first-time homebuyers.
Despite stricter lending regulation since the housing bubble burst, there is an easing of policies with more flexible guidelines, especially regarding down payment and credit score. Even though almost a decade has passed since the Great Recession, many first time and experienced homebuyers still hold these preconceived notions about the immediate Post-Recession lending standards as truth.
According to the latest Elle Mae survey, 45% of renters believe that they have not saved enough money for the down payment. The National Association of Realtors (NAR) polled Millennials between the ages of 18-34. Only13% of this group know that it is possible to buy a home with 5% down or less. Researchers at Fannie Mae and Cal State Fullerton conclude that it is more efficient strategy to correct consumer misconceptions by engaging households who are qualified to own homes but do not realize that they are qualify. Call us to find out more about how you can put 3.5% down for a loan amount up to $636,100, 10% down for a loan amount up to $1.4M, or 15% for a loan amount up to $1.7M to buy your dream home.
Our team at CenTek knows and lives the real estate market, both within the context of the US as a whole and also within our microcosm of Southern California. We follow trends and policy changes in the lending arenas to help our clients prevail with their offer. Unlike direct lenders who only represent the bank, we work with a variety of wholesale banks and specialized lending institutions to package the loan to highlight strengths and minimize any issues.
CenTek Millennial Solutions is our newest program that specializes in helping first-time homebuyers succeed. Although some Millennials may not have the funds necessary for a full down payment by themselves, there are many other creative options for friends or family to help their millennial prevail with their offer. New credit formulas, such as the concept of the Non Occupant Co-Borrower and higher DTI Ratios, are helping some. In July, Fannie Mae relaxed the DTI Ratio from 45% to 50%, making it easier for those with college loan debt to obtain loans. Relatives can also gift portions of the down payment to buyers. We follow changes in underwriting guidelines and how to utilize these concepts to help young people become first-time homeowners.
By combining our decades worth of technical expertise with our knowledge of lenders’ current policies, we prepare our clients to compete with multiple bid properties, including all cash offers. Pre-approval and approval letters are taking on a new dimension and gaining importance because they indicate that the buyer does not have an issue in obtaining a loan. Contact us today to strategize a game plan for you or your clients. We can issue a detailed up-front loan approval so the buyer is prepared to waive loan contingencies with an offer, when appropriate, to make your offer look as attractive as possible.
Gloria Shulman, Curtis Cohen, and the rest of us at CenTek