Winter is not usually the time most people are looking for a new home. The weather makes going out more complicated, not to mention keeping a house clean to show it, and most people don’t even want to think about moving in the winter.

First-time home buyers are feeling the pain especially - and that’s roughly half of the market. Chances are if you are a first-time home buyer reading this, you are exhausted by the search and demoralized by the competition.

You might even be one of the millions of Americans hoping to rely on a Federal Housing Administration loan and have recently been troubled by the Trump administration putting a freeze on the potential premium cut Obama had attempted to put in place. However, now could be a good time to keep looking.

FHA Loan Premium Cut

Millions of homeowners have received loans backed by the Federal Housing Authority, which offers loans to borrowers with lower credit scores or who don’t have a large down-payment. In 2015, 1.1 million borrowers obtained an FHA loan, which are often available for interest rates as low as 3.5%.

Borrowers pay an insurance premium to cover FHA’s losses in the event of insured loans becoming delinquent. The insurance premiums go to the FHA’s Mutual Mortgage Insurance Fund, and they are what the outgoing Obama administration had attempted to cut to help FHA homeowners in 2017.

The Trump administration has put a halt on all pending policies enacted by Obama’s administration in its final days, which includes this measure that would have saved homeowners an average of $500 this year.

The Good News

The good news is that, in the grand scheme of things, $500 isn’t going to make or break your decision to buy a home. The FHA isn’t the only institution willing to offer mortgages at lower interest rates, either.

The other interesting thing is that, while interest rates rose in the weeks leading up to President Trump’s inauguration and experts say they will continue to rise in 2017, interest rates are down right now. The average rate of a 30-year fixed mortgage, Freddie Mac reported Thursday, is 4.09% down from 4.12% last week. As a result, right now is a good window to think about using if you’re ready to apply for a mortgage.

Saving For a Down Payment

The enormous obstacle for most homeowners - or would-be homeowners - right now is a down payment. It’s the reason the FHA loans can be so helpful in getting a family otherwise unable to save that much into a home. In fact, saving 20% of a down-payment is two-thirds of the average household income in this country. The fact is, housing prices are rising and income levels are not.

According to a CNN Money article, the average house costs $192,500. Twenty percent of that price is $38,500, which isn’t a number the average family can come up with in a year - or even two or three years.

The good news here is that, while housing shortages are a reality for first-time home buyers in all parts of the country, the places where this has reached a crisis level are relatively few.

In Michigan, and other states in this region, the percentage of your annual income needed for that down payment is still relatively low - around 50% - as compared with some cities in California and on the East Coast - which are at closer to 100% or more than the average annual income.

Take Away

First time home buying has obstacles. We here at the Jamey Kramer Group understand all too well what you’re facing. We’re here for you every step of the way. Please give us a call today.