June is National Homeownership Month: Part 1
Today’s housing market is in recovery, but many Michigan first-time buyers are still struggling.
June is National Homeownership Month. The U. S. Department of Housing and Urban Development (HUD) is celebrating by recognizing the critical role owning a home plays in communities across America and the success of several government programs. Today’s housing market is in recovery, but many Michigan first time buyers and homeowners are still struggling. Let’s take a closer look at what is happening with home purchasing:
First-time homebuyers are facing tighter lending standards. Those with limited money for down payments and less-than-pristine credit histories are finding it difficult to qualify for a mortgage, according to a recent Wall Street Journal article. The Michigan State Housing Development Authority recently launched new programs to address these issues. MI First Home strives to assist first time homebuyers with down payment assistance in eight targeted cities. MI Next Home is designed for repeat homebuyers to purchase a home with an FHA, RD or VA mortgage while foregoing some of the more restrictive aspects of the MI First Home program; down payment assistance is also available for those who qualify.
On the bright side, lenders have slightly loosened mortgage standards and many young adults are getting tired of living with roommates or their parents. Lenders are looking for more business, as the refinance surge during the past several years has already reached most current homeowners.
The nation’s most affordable homes sought by first-time home buyers are also the most likely to be underwater, according to a recent report by Zillow. This means about one-third of homeowners with a mortgage are unable to sell their homes for enough profit to afford down payments on new ones and comfortably pay selling expenses. The negative equity situation is causing a drag on the housing market recovery because it constrains inventory of available homes especially those most affordable at the lower end of the market. A Grand Rapids Press article last week discussed how low inventory slowed May home sales in West Michigan.
Foreclosure numbers have declined and are at lower levels compared to 2005. Unemployment rates have also gone down in recent years, according to the Bureau of Labor Statistics, which makes homeownership attainable and mortgage payments more sustainable
Michigan State University Extension offers education on the process of purchasing a home, either through an online or group class. Topics include, shopping for a home, applying for a loan, and the closing among other topics. The 6-8 hour online class can be done at your convenience and a certificate of completion is provided for both classes. Some lenders are now requiring a qualified home buyer education course be taken before closing.
Questions? Contact your local MSU Extension office to speak with a housing counselor. In other areas, find a housing counselor at http://www.mshda.info/counseling_search/
If you are wondering about your financial health, take a financial health survey from MI Money Health to get your financial health score! It is confidential and your answers never connect back to your name. This survey can help you evaluate your current financial situation, provide ideas on how you may improve your financial health and connect you to resources in your local community.
Other articles in this series: