New Rules for First Time Homebuyers
Although it would normally be true that a housing-market slump would benefit first-time buyers, the purchase process has become more difficult and expensive because of new rules, regulations and policies. Now, whereas first-time buyers used to account for 40% of home sales, they make up just 29% of sales. The reason for this decrease is the increase in fees, costs and rates as well as requirements for higher down payments. The reason for rate and fee increases is directly related to the mortgage meltdown and the number of home loans in default and foreclosure; banks are using these strategies to help cover their losses. To make homeownership worthwhile, first-time homebuyers will need a higher down payment, should plan to stay in the home for at least 10 years, and will need to make a competitive offer.
SOURCE: The Wall Street Journal, 3/8/11
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