COLORADO SPRINGS – For people who don’t own a home, it was like being outside a cash grabbing party, watching homes appreciate at an almost record rate over the past 18 months.
“The housing market is hot,” said Randy Bell, owner of START Real Estate.
Bell says it’s one of the hottest markets for the past 15 years. START operates Colorado First Time Home Buyer, an in-company program that helps first-time home buyers find programs that can help them buy their first home.
“Sitting down with first-time homebuyers, if it was 15 years ago and they were buying a home for $ 100,000, they were stressed, they were scared.” Bell recalls, “If they’re buying a house now for $ 450,000 for the first time, they’re still stressed and they’re still scared. “
With a median price of a home in Colorado Springs at $ 450,000, it’s intimidating, especially since first-time homebuyers can’t tap into the equity of an existing home to make a down payment. important, or have money on hand for when a home receives offers on its appraised value.
“People are going to think they need 20% off and a ton of money. It’s not true. ”Bell said.
First, there are grant and loan assistance programs available specifically to first-time home buyers.
One is from the Colorado Housing and Financing Authority, CHFA, which has two programs. One is a non-repayable grant of up to three percent towards a down payment. The other is a home loan assistance loan, or “silent second mortgage”. This is called a “silent second” because buyers can get up to 4% of a down payment on a loan, but the repayment of that loan can be deferred, for example, until the house is either sold or refinanced.
At a more local level, El Paso County’s turnkey program offers up to five percent down payment assistance grants, but this program has a more limited pot of money.
Bell says it’s also important to remember that first-time buyers are unlikely to be looking for the $ 450,000 price tag.
“We are also talking about recovery. We know that their first home will not be their final home, nor forever. It’s a first home, something to build equity in.
Bell gives an example of the last 12 months in the Colorado Springs market which has appreciated by 18% on average. In a $ 350,000 house, that comes down to $ 63,000 in a year.
While some buyers consider building a down payment greater than 20% to avoid mortgage insurance, Bell says it’s important to keep equity in mind.
“That’s a lot of money to be made and most people in a year can’t save $ 60,000.” said Bell.
How much down payment or how much a buyer can bid against demand are two issues Bell says it sees frequently. However, they are not something to be discouraged in his mind.
“When a salesperson says you give your best and your best, they’re two different things,” says Bell, “The higher is one thing, the best can be something else. this house, sixty days to move, you can make a lease back where you can’t charge rent [to the seller]. “
Either way, Bell doesn’t believe the market will slow down anytime soon.
“You have to start somewhere, you have to get into it. Bell said.