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Realtors, lenders expecting an increase in young homeowners

September 02, 2002|by EDWARD MARSHALL

Realtors and lenders in the Tri-State area say they expect the number of young homeowners to increase due to low interest rates and programs that require no down payment.

"There are a ton of young first-time home buyers coming into my office," said Margaret Welling of Coldwell Banker Premier Properties in Martinsburg, W.Va.

"There has been an increase in young home buyers," said Lee Downey of Century 21 MG Realty in Hagerstown. "Lowered interest rates have made it extremely attractive to purchase a home."

In some cases, young homeowners are finding they are paying less per month in financing their homes than they would if they were renting.

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For example, with a 30-year fixed-rate mortgage with an interest rate of 8.5 percent, the payment per month for a $100,000 dollar house would be $768. A first-time home buyer with good credit can qualify for a fixed-rate mortgage with an interest rate of 6.5 percent or better.

In comparison the average cost of rent per month in the Tri-State area ranges from $403 for a single-bedroom apartment to $740 for a four-bedroom apartment, according to the U.S. Department of Housing and Urban Development's 2002 fair market rent statistics.

"Now is the best time to think about buying a home. If you're renting right now you should seriously think about your options," said Lois Baer of Re/Max Associates Realty in Waynesboro, Pa.

While Realtors and lenders say conditions are favorable for new homeowners, qualifying for a traditional loan can be difficult.

Due to limited savings, many first-time home buyers are drawn to federal loan programs designed to get them into the housing market with little or no money down.

"They don't have as much savings as older people in the market," said Kurt Trumpower of Jack Gaughen Realtor ERA. "They swing more towards government-backed loans."

Private lenders are also offering home loans with no down payment to attract young home buyers. Some lenders see such packages as the major factor in increasing home ownership by young people.

"Lower interest rates are not necessarily what first-time home buyers are thinking about," said Thomas Burke, president of Mid-States Financial Group. "What they are thinking about is 'how can I get into the home I want and still afford the down payment.' "

"The biggest factor is the lower cash down payments required to purchase a home," said mortgage loan officer Donna Stayers of Home Federal Savings Bank in Hagerstown.

Much of the activity in the market - where mortgage rates are at a 40-year low - involves existing homeowners.

With the demand for new homes outstripping supply, many homeowners are capitalizing on market conditions by either refinancing their rate and term structures or upgrading to larger homes at relatively little increase in cost.

"It's a seller's market right now. There are more buyers than properties," said Herald Young of Liberty Realty in Martinsburg.

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