When I was 14 I told my dad about the dream vehicle I wanted and all the cool things it could do. I could tell he enjoyed the story but he had some questions about how I was going to afford said dream vehicle. Who knows what garbage came out of my mouth next but in that conversation he taught me a lot about affordability. I learned wealth is when you can afford what you want. If I buy what I want which is more than I can afford, I am going the wrong direction. If buy what I can afford and what I need then I am positioning myself to afford what I want in the future.
I share this story because the biggest frustration most first time homebuyers express (like over 80%) is the painful reality that what they can afford is not what they want. Or that what they want they cannot afford.
That leaves them with 3 choices.
1. Quit trying to buy and keep renting.
2. Go to all lengths to FORCE it to happen.
3. Shift to affordable options.
I wish the news was better but #3 is rarely in serious consideration.
CASH IS STILL KING
There is a thing in the mortgage business called first payment default risk. That is caused by someone that has no reserves or savings at the time of closing and it is likely they will not make their first payment. Sadly, this is the situation with a lot of first time homebuyers.
We think this is a bad business practice and reccommend our customers have a minimum of 3 months of mortgage payments in reserves.