The Great Recession of 2008 had a momentous impact on the United States, leaving many cities across the country in an economic and political crisis. While the majority of areas showcased significant economic improvements by 2010, Kentucky struggled to catch up. This stirred hesitation for prospective homebuyers and instilled a concern for current Kentucky residents, as buying sentiment dropped alongside home-prices which fell as much as 13.9 percent nationwide. Over the past couple of years, however, Kentucky is showcasing significant growth, as seen in the graph below, indicating that this state has been steadily improving not far behind the national rate.
Source: Kentucky Chamber | 2018
While urban areas have seen notable job growth since the recovery began around 2010, rural regions haven’t been so lucky. Employment in metro and rural areas largely grew beside each other in the ’90s, following similar growth patterns through the 2000s. Although, once the recovery began in 2010, growth patterns greatly deviated. An additional report produced by the Kentucky Center for Economic Policy, “The State of Working Kentucky 2018”, explains that “Whereas metro Kentucky has seen strong job growth this decade, non-metro Kentucky has experienced essentially no net job growth.”
Still, the compelling growth rate of urban centers makes the move to the Commonwealth of Kentucky more attractive than ever before. Amongst the affordable housing, strong workforce, fascinating history, hot browns, the Kentucky Bourbon Trail, and the one and only Derby season, Kentucky is a great state to put down roots. The Kentucky Derby alone has a 400 million dollar economic impact on the region, based on recent economic impact studies. The Kentucky Housing Corporation even offers a variety of homebuyer crash courses, conferences, and down-payment assistance to encourage families to invest in homes. This has steadily boosted the population since 2009.
If you’re taking the step towards the American dream of homeownership, then Kentucky should be on your radar, specifically these three cities with the highest growth rates:
As the largest city in Kentucky, it doesn’t come as too much of a surprise that Louisville makes the list. Between hosting the Kentucky Derby, producing the most popular brands of bourbon and housing the Louisville Cardinals, this city stays busy. Since the end of the 2008 recession, Louisville’s wages and salaries have grown 44.9 percent, only slightly lower than the 48.6 percent national average. As of 2017, the number of homes sold between January and the end of November was up 2.2 percent compared to the year prior. The president of the Greater Louisville Association of Realtors, Dave Parks, says Louisville remains one of the “more affordable cities in the country for millennials,” thanks to low-interest rates and reasonable home prices. If you’re a fan of scenic waterfronts, affordable housing, and Louisville style chili (a spicy chili served over spaghetti), then start perusing the housing market in this vibrant city.
The second largest city in Kentucky isn’t only the “Horse Capital of the World”. Lexington’s vast art scene, rich culture, economic diversification, and high education rate set it apart from other regions, while the flourishing culinary scene may be enough to make you drop everything and move there today. This city may be small, but it’s large in history and personality. With an overall growth rate of 8.6 percent since 2010 and a wage and salary growth increase of 38.1 percent since the end of the last recession, this city shows no sign of slowing down. Have yourself a mint julep and celebrate all that Lexington has to offer, you may just never leave.
The Everly Brothers hit song “Bowling Green” may have given you an idea of just how great this bustling city is. If you’re seeking out southern hospitality, affluent history, and classic car shows, look no further than Bowling Green. This lively metropolis is Kentucky’s third-largest city and recent estimates show that the city’s population is up 12.3 percent since the last census was taken in 2010. With a variety of homeownership assistance programs like the Live the Dream Homeownership Program, this city is an attainable option for households with an array of incomes. Since the end of the recession, this region’s employment growth has increased by 12.6 percent. Home to large companies such as Fruit of the Loom, General Motors, and The Bowling Green Assembly Plant which produces all Chevrolet Corvettes built since 1981, the job market is approachable to an assortment of professionals, not to mention the wages and salaries have steadily increased since the end of the great recession of 2008.
Many states like Kentucky have been crossed off soon-to-be homebuyers lists due to past fiscal issues, which is a completely valid concern, but don’t let the stigma around former hard times stop you from considering beautiful reestablished states as your new home.
The progress of these Kentucky cities proves the great strides the commonwealth has made over the past decade. Whether you’re a current resident of Kentucky looking to make a move, or a prospective homebuyer who has a heart for the Bluegrass state but felt uneasy about the economic issues that arose from the recession of 2008, it’s time to breathe easy and reconsider this state as your new and improved home.
According to a survey conducted earlier this year by the National Association of Realtors®, about 75% of non-homeowners believe homeownership is part of their American Dream, while nine in 10 current homeowners said the same.
How do you feel about homeownership? What does it mean to you? Vote in our poll about homeownership.
Homeownership is the bedrock of the American dream. For many people, owning their very own home is a major life ambition and motivator for how they lead their professional and personal lives. It can often seem like this goal is impossible to achieve considering the huge toll it takes on one’s bank account, but thankfully that is not the case.
To support long-term economic growth, the U.S government provides a great deal of support for homeowners. By decreasing the risks mortgage lenders take on, the government keeps interest rates low. As long as you educate yourself with helpful resources, you’ll be as equipped as the professionals when it comes to avoiding costly mistakes and taking the next step towards homeownership.
Now that it’s time to make the leap and buy a home, you’re most likely balancing your excitement with a great deal of jitters. You can breathe easy—we’ve got your concerns covered with our comprehensive Do’s and Don’ts for First-Time Homebuyers.
As exhilarating as it can be to hear your first mortgage offer, don’t make the all too common mistake of locking down your first offer. Even if your initial rate quote seems like a great option, there are various other factors to take into consideration such as closing costs and mortgage points. Mortgage interest rates vary based on the lender, so do yourself a favor and apply with numerous lenders. Debra Grog, an agent with Movoto Real Estate, has a great rule of thumb when choosing a mortgage, “When considering your price point, start with the amount of rent you are paying now, not necessarily what the bank/mortgage company says they will loan you.”
Your credit score is quite possibly the most important determinant when it comes to being approved for a loan, as well as the first building block to secure a financial foundation for yourself. The first thing lenders will take a look at is your credit history and the greater your history is, the higher your chances are for acquiring a good interest rate. While achieving the highest credit score you’re capable of before applying for a mortgage is probably a given, often times checking for errors isn’t. Even the smallest glitch on your credit report could result in your interest rate skyrocketing, so this is certainly not a step to skim past. A great resource to use is Annual Credit Report, which is the only credit report website that is authorized by the federal government and good news—it’s free!
You’ve probably heard people mention that you “have” to make a down payment of at least 20%, but today that is far from the truth. The National Association of REALTORS® conducted a study this past year showing that the median down payment for new home buyers was only 6%. While this percentage may not come as much of a shock when assuming what young homebuyers can afford, it may seem surprising that it is even possible to put down as little as 6%. Making a larger down payment is a completely viable option as long as you don’t entirely empty your savings or neglect factoring in additional expenses. Just because a loan program allows you to purchase a home with 0% down, that doesn’t mean it is the right financial choice for you. As Michael Nicholas, the director of U.S. Mortgage Sales and Service at BMO Harris Bank, says, “You don’t want to be house-rich and cash-poor—feeling comfortable and confident with the decision you make is the most important factor of all.”
As we touched on earlier, there are dozens of programs created solely for first-time homebuyers just like you. There is no need to put your dream of homeownership on the backburner for decades while you save up every penny. Depending on where you’re located, there are an abundance of programs that offer low down payment loans, closing cost assistance, and reduced interest rates. States all over the country are proud to be offering these plans. In addition, these programs hike up home sales which improves the economy in the long run. There are also federal programs to consider, such as an FHA loan, which is a mortgage insured by the Federal Housing Administration that allows borrowers to make a down payment as little as 3.5%.
Although it seems like the most appealing and fun way to begin the homebuying process, shopping for a house before a mortgage is one of the biggest mistakes you can make. If you’re not clear on how much you can borrow, visiting properties will result in just that; a visit. To ensure you’re viewing homes that are in your price range, begin by reaching out to a mortgage professional and consider getting pre-approved for a loan. This will not only set you apart from other bidders, but give you ease when house hunting. Don’t tease yourself by jumping 10 steps ahead with a home that isn’t realistic for you.
Once you reach the home inspection step, that means you’re on the cusp of closing on your new home! There are just a couple more measures to take before closing your mortgage. To ensure you save as much money as possible, finding the perfect home inspector is crucial. A home inspection isn’t just a second or third viewing. The inspection is your chance to take a good hard look at the building and note any defects. Double checking your home inspector’s credentials will help avoid surprise repairs later that you’ll have to pay out of pocket as opposed to the former owners.
By taking all of these commonly encountered mishaps and tips into account, you’ll cruise through the homebuying process with comfort and ease. You don’t have to pinch pennies well into the future in order to turn your dreams of homeownership into a reality, you just have to enlighten yourself on the steps of purchasing a home and make financially responsible decisions along the way.
Don’t keep telling yourself tomorrow, when you can change your life today.
The weather in New York in February, which has been impressively cold, rainy and snowy, has impacted the residential real estate market throughout large portions of the U.S. for February 2019 by stalling some buying and selling actions. Nevertheless, housing markets have proven to be resilient despite predictions of a tougher year for the industry.
New Listings were down 4.1 percent to 13,562. Pending Sales decreased 1.5 percent to 8,915. Inventory grew 0.7 percent to 60,966 units. Prices moved higher as the Median Sales Price was up 9.8 percent to $280,000.
Days on Market decreased 2.3 percent to 85 days. Months Supply of Inventory was up 3.8 percent to 5.5 months.
After years of paying rent, the dream of homeownership will not only start to become increasingly appealing but begin to actually seem approachable at a certain age. As income becomes more consistent, credit scores improve and a specific lifestyle becomes predominant, you may become ready for this step sooner than you originally thought. There is, however, one large issue which can prevent homeownership from becoming a reality for millions of people: high student debt.
When you’re overwhelmed with student debt, it may seem like homeownership is unattainable, but that is far from the truth. While high student loan debt will impact your mortgage approvals, there are dozens of ways to plan accordingly and improve your odds of getting approved for loans. With attentive planning, the right resources, and a deep breath, your dreams of homeownership will transform from fantasy to reality.
There is a reason that first-time homebuyers account for a smaller percentage of the housing market, and that reason is daunting student loan obligations. There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt, and that’s only in the United States. According to personal finance website Make Lemonade, 2019 statistics show “The average student in the Class of 2017 has about $40,000 in student loan debt, compared with $37,172 in student loan debt for the Class of 2016.” This statistic has increased drastically from college seniors in 2009 who graduated with an average of $24,000 in student loan debt. Despite these steep numbers, millennials have still been the largest group of home buyers since 2013 at 36%, and 65% of these buyers were also first-time homebuyers.
J.R. Duren, a personal finance expert, has one of these victory stories to share. With over $100,000 in debt, he and his wife were still able to purchase a home. Duren explains how an income-based replayment plan helped him pay off his combined loan burden. Another fellow victim to student loan debt, Dr. Goldie Winge, shares, “last year, I bought the house of my dreams despite having a medical school debt of over $120,000.” She was able to do so by keeping her credit excellent and having good financial reserves.
These numbers may seem alarming at first, but it’s the next step you take that determines whether your dream house will become your new home, or someone else’s. When applying for a mortgage, there are three central factors to focus on — your down payment, your credit score, and your debt-to-income ratio.
The amount of money you’re able to put down on a home will directly determine which mortgages you are eligible for. It’s a universally known challenge to bulk up your savings when you’re busy picking away at your debt, especially hefty student debt. If the amount you’re able to use for a down payment is a bit shy of your goal, there are plenty of down-payment assistance programs to help you. Sonyma, State of NY Mortgage Agency, for example, offers a program called Achieving the Dream which provides low down payment mortgage financing for qualified low income first time homebuyers in New York on 1-4 family residences. The DC Housing Finance Agency, DCHFA, also has a similar program named DC Open Doors which offers competitive interest rates and lower mortgage insurance costs on first trust mortgages, as well as fully forgivable second trust loans, whether you’re buying your first or fifth home.
These competitive rates can result in a 0% down payment loan for homes in the District of Columbia. Randall Yates, founder and CEO of The Lenders Network recommends another great resource; the HUD website, in which you can browse homebuyer programs by state. Alternatively, there are federal loan programs such as an FHA loan, which is a friendly option even if you have student loans and could allow you to make a down payment as low as 3.5%. Be sure to take your time researching your array of options and you’ll be surprised at how much lower your down payment can be.
Your credit score is one of the first things financial institutions will take into account when deciding whether to approve your mortgage. You may be thinking uh oh…I haven’t checked my credit score in a while, or even wondering what is a credit score? Many are under the impression that if you have student loan debt, your credit score will suffer. This is fortunately not the case, and in fact, quite the contrary. Melinda Opperman, an expert with over 19 years of experience in the financial industry explains, “When managed properly, student loans can be advantageous in helping to build your credit history.” Using a variety of credit methods, such as credit cards, car payments, and even student loans, shows lenders that you are capable of handling different types of debt. As long as you’re not missing any payments, your credit score should stay rather stable. What you can do is focus on boosting your credit score. A few ways to do this are by simply paying your bills in full before or on the due date and managing your credit use, in other words try to use as little of your available credit as possible. Keep a close eye on your credit score in anticipation of the home buying process to ensure your score is optimized and up-to-date.
Lenders will also take a look at your DTI (debt-to-income) ratio, which shows the percentage of your monthly income required for debt repayment. Unfortunately, your student loan payments fall under your monthly debt umbrella. The good news is that you can successfully manage your DTI with some planning and strategy. As soon as you begin to repay your existing debt, whether it be a small amount or a large amount, your debt-to-income ratio will lower and you will potentially receive a better interest rate. If you’re having trouble making your monthly payments, consider refinancing your student loans. This will lower your interest rate and demonstrate to lenders that you’re well on your way to pay off your discouraging debt.
Many dive into the house hunting process prior to getting a mortgage, and then become disappointed when they aren’t approved by a lender and miss out on the perfect home. By getting pre-approved, you will know exactly how much you can afford and avoid setbacks. Getting pre-approved for a mortgage involves a lender evaluating your financial history and then putting together a letter illustrating how much of a loan you can qualify for. This shows your seriousness and motivation as a buyer, which bumps you ahead of other interested parties without this advantage. There are dozens of costs, some hidden, when it comes to purchasing a home and getting pre-approved from a lender will assist you in preparing for the cost requirements.
The American dream of homeownership isn’t impossible. It’s actually quite attainable with the right knowledge and careful planning. Don’t allow your student debt to slow you down and keep you from your lifelong aspiration of having a home to call your own.