Red-hot market: Tips for first-time homebuyers
With Long Island's housing market sizzling hot, the process of buying a new home can seem like a daunting one. It doesn't have to be.
To help first-time homebuyers chart the waters of buying in this market, Newsday Live hosted a question-and-answer session Tuesday with local housing experts as part of its web series "Hot Tips for a Hot Market."
The virtual session, moderated by Newsday anchor Faith Jesse and residential real estate reporter Maura McDermott, included Tricia Gleaton, vice president of the Homeownership Center at the Community Development Corp. of Long Island, and Quentin Hardy, branch leader with Movement Mortgage in Huntington.
Responses have been edited for length and clarity.
Where should buyers get started? And what first steps should they take?
Gleaton: For somebody who's looking to buy a home for the first time, a great place to start is by seeking out homebuyer education and counseling. A lot of people aren't aware they exist. And part of that process will be to help establish a budget, understand what's affordable and what's going to be [financially] comfortable long term ... and then getting access to loan programs, down payment assistance and closing costs, and grants that are out there that may be leveraged in the home purchase.
Many first-time homebuyers don't have the standard 20% down payment. What tip can you give them on saving up? And what options do buyers who don't have 20% to buy their first home have?
Hardy: There are lots of options. I think the phrase "the standard 20%," that's not the standard. It's sort of a myth and a belief that's been propagated but I bought my first home back in the late 1990s with 3% down. Fannie Mae, Freddie Mac, FHA ... there are lots of 3%, 3.5% down payment programs so you do not need 20% as a first-time homebuyer. There are lots of low down payment options buyers should look into. I know for my first home, we had to sacrifice. I lived at my parents' house as an adult, married with a child because that's what we needed to do to save up to buy our first home.
Gleaton: Many lenders offer down payment and closing cost assistance as well as state [and municipal] grants. There are programs available where someone can rent with the plan that they're moving forward with the purchase of the home. And there are unique programs. One of the programs CDC of Long Island offers may help [people who are] Housing Choice Voucher holders, commonly known as Section 8.
A lot of people have blemishes on their credit report. So what can people do if they have bad credit, but they still want to get a home?
Hardy: I think where we have to start is with that word bad. How bad is bad? You can have credit that's so poor that you cannot get a home loan. But there are banks that will do loans at 580. There are situations where you can get loans as a first-time homebuyer even if you have bad credit. It can be low enough that you've got to work on the credit first, though it would probably be a great start to have a conversation with a professional about how bad bad is.
The market is hot right now. Should buyers try to wait it out in hopes that it'll cool down?
Gleaton: It is a very competitive market right now but that hasn't necessarily dampened people's desires to become first-time homeowners. One of the things that we tell people is you don't have to rush ... it doesn't necessarily mean you don't want to continue your search. Continue to save, continue to work toward your purchase, but be patient recognizing that you want to make an informed decision that's not emotional. Be careful with bidding wars. Take your time to do your search and research in a methodical way. Be patient. The right home is out there for you.
Hardy: The general rule is it's not the timing of the market, it's time in the market ... so that now is a good time to buy.