As I see it, the American dream of new home ownership for families 35 and younger is fading fast.
With the average price of new homes at $289,000 nationwide, according to the U.S. Census, renting or analyzing the pre-owned market for purchase seem to be the only two solutions available. Even with loans easily available, through the Federal Housing Administration, with as little as 3.5 percent down and currently historically low interest rates, the potential first-time buyers are strapped for the cash down payment.
Many younger families are under pressure with college loans, car loans and credit card debt. Savings today nationwide, have fallen dramatically since 1977, according to the U.S. News and World Report.
There are many older homes available today as compared to the new homes being sold today. Some of those sellers may be willing to help you with a lease option to purchase. Not every seller is in need of the immediate cash to move in another direction. The lease option varies for you and the seller to negotiate out to fit both your needs.
Basically, you design a lease where a portion of your rent payments are applied to the purchase of the home in the reasonable distant future. It may be that after two to three years or so, you would have your 3.5 percent down payment in the hands of the owner and could complete the purchase if you still desire to. With the lease option, you are not obligated legally to complete the sale. If saving for a down payment seems to be impossible, this may be a good solution for you.
Most of all, you avoid paying the high price for a new home by taking the time to find a livable older home with the size and amenities you actually need in a home. Many homes are coming into market today that were built in the 80’s and 90’s that have been lived in by the original owners, and they are now in the stage of their lives to downsize or move to another lifestyle. Not all have been updated but many have.
If you favor country living or the small village lifestyle, you will find many choices; particularly ranch homes in the 1,400 square foot range. Many of these homes have three bedrooms, two baths, family room, living room, dining room, eat in kitchen and two-car garages.
Keep in mind that this is just your first home and you may well have at least five more in your lifespan.
Seniors over 65 will soon be the largest segment of the population, and they own the highest percent of homes. The median list price in Hancock County (zip code 46140) is $133,500, with many in the $110,000 price range, according to realtytrac.com.
Thousands of these 1,400 square foot homes were built in the last 30 years, which should give you a wide range to pick from. Some of these homes will require updating to fit your lifestyle, and that can be accomplished through the FHA program known as the 203K program, which allows purchase of the property combined with funds to remodel the home all in one loan and closing. It’s a great way to go, and it was designed many years ago to provide funds for first time buyers and others.
With my 35 years in the building and remodeling field, I used the program many times for customers. Just be careful that you do not go overboard with your wants, and concentrate on your needs with remodeling. If you hire the work to be done, you will only recoup about 65 percent of your investment in the remodel portion upon resale.
Your remodeling, properly placed, will indeed help with the resale and return on your investment. For the vast majority of retirees, their owned home is their largest single asset.
Do you want to be part of the “American Dream?”
If you desire addition information or clarification of any of this information, please email me at email@example.com and I will help you with your dream of home ownership.
Dean McFarland is a board member for the Central Indiana Council on Aging.