Thursday, July 19 , 2018, 5:12 am | Fair 63º

 
 
 
 
Real Estate

Alec Bruice: 1st-time Buyers Flee Pricey Rental Market; Banks Respond With Low Down Payment Options

Many of those looking to buy a home are fleeing an expensive rental market. About one in four homebuyers surveyed this month cited high rent as their reason for house hunting, a significant jump since last summer, according to a survey conducted by Redfin.

The change is attributable to first-time buyers. In the most recent survey, more than 50 percent said high rent led them to the market, as compared to only 25 percent of first-timers in August.

“Though enticed by high rents and low mortgage rates to begin a home search, first-time buyers face a number of obstacles in todays competitive market,” said Redfin chief economist Nela Richardson. “In many cities, starter homes have seen the largest price increases because the supply of affordable homes on the market is so low and the demand for these homes is so high.”

Buyers were asked to choose up to three of the most important factors in a home, beyond square footage and price.

Three choices rose to the top: the layout, finishes and design were most important (46 percent), followed by school quality (41 percent) and a yard or green space (39 percent). Ease of commute came in fourth, checked off by 32 percent of respondents.

As some banks veer from Federal Housing Administration loans, they’re offering their own low down payment mortgages to appeal to home shoppers struggling to save enough to buy a home.

Wells Fargo recently made headlines when it debuted its 3 percent down payment loan.

JPMorgan Chase also announced its offering called the “Standard Agency 97 percent” program, a 3 percent down payment loan geared for first-time home buyers and requires a FICO score of 680.

Chase also has a loan program called “DreaMaker Mortgage,” which offers a 5 percent down payment, 3 percent of which can come from the borrower as well as flexible funding options for closing costs and reduced mortgage insurance requirements.

Other banks have recently announced their low down payment offerings. Earlier this year, Bank of America began offering a 3 percent down payment loan that did not involve the Federal Housing Administration and does not require mortgage insurance. The bank requires a minimum FICO score of 660.

For lending options that best suit your needs, contact a local mortgage lender.

*Taken from the California Association of Realtors.

Alec Bruice is a licensed real estate broker with Santa Barbara Brokers and the 2016 president of the Santa Barbara Association of Realtors. Contact him at [email protected] or 805.637.5774. The opinions expressed are his own.

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