The Toughest Homes To Buy In Today’s Real Estate Market
Q: Gerald, My husband and I just got out of graduate school and are trying to buy our first home. There weren’t many homes available in our price range. We found a home we liked and were pre-approved for a mortgage but our loan was denied. Is it supposed to be this hard? Mary, Dallas, Tx
A: Mary, I understand your frustration. Lower priced starter homes ideal for 1st time homeowners are hard to come by right now–starter homes as a percentage of all homes available in many real estate markets are at all-time lows.
There are many factors that are contributing to this dynamic: Firstly, the cost of land has gone up in many real estate markets so builders often can’t afford the lower profits from starter homes and instead choose to build pricier homes that yield bigger profit margins. Compounding your challenge is the fact that lending standards have remained tight which tends to affect 1st time homeowners like you and your husband more than other home buyers.
For you investors out there, take note of this trend when you are calculating your estimated holding time for your fix and flip properties if they are starter homes.
Regarding your loan denial, follow up with your bank or mortgage broker and find out why your loan was denied, regroup, get your credit reports from all 3 major credit reporting bureaus: Experian, Transunion & Equifax, then check all 3 credit reports to make sure there isn’t any inaccurate information in them. It’s a good idea to look at your credit report a few times a year anyway because your personal credit affects so many things in your life.
It may challenging to get your first home, Mary, but it’s well worth the effort, so hang in there and try again and remember, you only need one lender to say yes.
Thanks for your question, Mary. Good luck.
For more real estate tips and information, visit my blog at geraldlucas.com.