With home prices rising to all-time highs, pricing rather than rate seems to be what keeps some potential buyers out of the market. But rents are rising at even higher rates in some areas of the country, so waiting out the housing bubble may not be a viable option for potential home buyers.
Look for Condos, Townhouses, and Apartments
A single-family home is usually what many people think of when they envision buying a house. But other, lower-cost options can help a new couple or someone else who needs a starter home get into a place with payment stability and rising equity. Apartments, condominiums, duplexes, and townhouses tend to be more affordable than detached homes, although they don’t offer the same levels of privacy.
These assets also tend to appreciate, so owners are building equity they can use to help them move into that larger family dream home when they are ready.
Encourage Sweat Equity
Great bones are an essential element of a house; for some home buyers, it’s all they need. You might ask borrowers to work with a realtor to find fixer-uppers that have great structures but need some work to make them dream homes. Dated paint, ugly flooring, and other cosmetic issues can dramatically lower the value of a home. Still, a homebuyer with the time and energy can tackle the DIY projects. Getting into an affordable home and turning it into your masterpiece can be extremely emotionally and financially rewarding.
Consider Manufactured Homes
Although manufactured homes do not appreciate at the same rate as traditional family homes, they can provide a low-cost starter option to some borrowers. The purchase price is typically lower, making monthly payments affordable. Even with the added expense of renting a spot for the manufactured home, this option can offer stability to renters who face periodic increases. Their monthly mortgage and space rental payments may even be lower than their rent, allowing them to later save for a down payment on a more traditional home.
Find the Hidden Gems
You hear stories of someone who bought the smallest house on the block or found a home in that neighborhood that took off in the next few years. Although luck may be a big part of this, the effort can also help find these hidden gems. Encourage your borrowers to work with a realtor who follows the trends and has a history of finding the lowest-priced homes in the best areas.
Remind Them They May Not Need a Starter Home
Depending on their current situation, your borrowers may be ready for a forever home. Not everyone needs to buy a small house and move every time they grow out of it. If they have the means to buy the home they want to live in for the rest of their lives, then help them go for it. Changing attitudes are shifting how people want to live and whether they want to keep striving for more, more, and more. These borrowers might be just the right fit to skip a starter home.
Although home prices can be a barrier to many buyers, you can help borrowers find the option that is right for them, whether it is a starter home, an attached home, or something else altogether.
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