Why
can’t these families buy homes?
 Vermont’s
housing prices have climbed out of reach for lower and middle
income families and the supply of starter homes is inadequate
to meet demand
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, is getting
increasingly unaffordable, particularly in light of the rising
costs of other necessities. In 2005, the median purchase
price of a home in Vermont reached $182,000 – an increase of over 10 percent from 2004
and an 87 percent increase from 1996. In some regions, the median purchase price
ranges from $250,000 to $350,000. Vermont’s median household income of
$45,700 can support a home price in the $125,000 range, depending on interest
rates. In the past, starter homes included condominiums, but their prices are
rising too. The 2005 median price of a primary residence condominium was $176,500.
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.
First-time homebuyers
have no experience with the mortgage process
Today's competitive 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 grants and
low-interest loans that can help them
The
NeighborWorks Alliance of Vermont has access to financial
products that can be used for downpayments and closing costs,
through their partners the Vermont Housing Finance Agency, the
Vermont Housing and Conservation Board, and NeighborWorks America.
Although many lower-income Vermonters would qualify for special
financing and reduced down payments, this information is not readily
available to them when they seek mortgage and homebuying information.
How
does VHI help low and moderate-income families? |
