Why many
Vermont families still can’t buy homes.
 Vermont’s
housing prices climbed out of reach for many families in
the last decade and the foreclosure crisis barely lowered
starter home prices in Vermont.
For most Vermonters, owning a home
is the bedrock of financial security because a home is the
largest asset they have. But buying a home, especially for
those who rent, continues to be unaffordable for many, particularly
in light of the rising costs of fuel and other necessities.
In 2008, the median purchase price of a home in Vermont reached
$200,000, which is not affordable to families earning less
than $50,000, even at today’s
low mortgage rates. Also, gone are the days of low down-payment
mortgages. With the tightening of the mortgage markets, a homebuyer
needs cash upfront for at least a 5% downpayment and typically
higher.
The good news is that condominiums prices have leveled off. Although the median
price of condominiums sold in 2008 was $187,000, there is more supply on the
market now than in the past 10 years.
First-time
buyers often struggle with credit issues.
In addition to the barriers of housing and mortgage affordability,
homebuyers often struggle with unresolved credit issues and
the complex maze of paperwork required to obtain financing.
New mortgage requirements have raised the credit score limit
to at least 680, and most lenders have eliminated special mortgage
products that accepted lower scores or any blemishes.
First-time
homebuyers have no experience with the mortgage process.
Today's real estate and mortgage markets
favor the sophisticated buyer. A first-time homebuyer
faces the challenges of a complicated lending process, understanding
the significance of credit ratings and scores, and the long-term
budget implications of ownership.
Statistics show that lower income families are half as likely to have their mortgage
applications approved as the rest of the population, even when the financial
requirements are met. Low-income applicants are also more likely to have
incomplete applications: 61% compared to an overall average of 26%. The
majority of the lowest income borrowers (54%) used high-cost lenders that specialize
in manufactured housing. National research shows that a third of all mortgage
applicants could qualify of lower mortgage rates than they actually obtain. The
HomeOwnership Centers identify those lower mortgage rates for customers.
Homebuyers
may not know of more advantageous mortgage products that can help them.
The NeighborWorks® Alliance of
Vermont has strong partnerships with area lenders that can help
homebuyers find affordable and appropriate mortgage products.
Although many lower-income Vermonters may qualify for mortgages
that can accept smaller down payments and lower credit scores,
this information is not readily available to them when they seek
mortgage and homebuying information.
“Between
a Rock and a Hard Place,” a recent study
on housing and wages in Vermont, can be viewed here (pdf).
How
does the NeighborWorks Alliance of Vermont help homebuyers? |
