Having a Hard Time Buying That First House? Let HOS Financial Help!
If you were wondering if the millennial generation is ready to take that step into home ownership, a recent HSBC survey shows the optimism that the next generation feels about the future. Eighty-three percent of the survey respondents indicated that they plan to buy their own dwelling between now and 2022, in a survey that covered nine nations, including Canada, the US, Australia, the UK and China.
The Canadian respondents showed that 34 percent of survey participants already owned a home – and that 84 percent intended to buy in the next five years (which includes existing homeowners who are planning a new purchase). Similar percentages came back from the US participants (35 percent owned a home and 80 percent planned a home purchase by the end of 2022).
The good news is that home ownership is a lot closer to a reality for millennials than people had thought. Within China, 70 percent of millennial respondents owned their own dwelling already, and 91 percent planned to complete a purchase in the next five years. Both of those numbers were the highest of all nine of the countries in the survey. Even Mexico (46 percent currently owning, 94 percent planning to buy in the next five years) had higher totals than their northern neighbors.
However, significant barriers stand in their way. Wages are growing, but they’re doing so at a glacial pace. Home prices, however, are climbing steadily. Interest rates remain at historically low levels, but they have started to creep upward, and that trend will only slow down if the market does.
Hard Time Coming Up With Down Payment
The HSBC Beyond the Bricks study also shows that 69 percent of respondents are struggling to save up a down payment. Within Canada, home prices went up by 7.4 percent overall during 2016, according to a report from the International Monetary Fund. In the meantime, the IMF only projects that wages will go up 0.9 percent in 2017.
So if you’re one of those Canadian millennials who are ready to stop the rent cycle and move into homeownership, but you’re having a hard time coming up with a down payment, things aren’t moving in quite the right direction for you now. Home prices are just going to keep climbing at least for the foreseeable future, which means that your required down payment will keep climbing as well.
So even if your credit is fairly good, if your budget is stretched fairly thin, and you don’t see yourself putting together a large enough down payment in the next few year, you’re going to have a hard time getting banks to work with you. Private lenders generally want a larger down payment than what traditional lenders require.
This is where HOS Financial can help you out. Our Rent-to-Own program isn’t the old-fashioned type, where you look in the back of the real estate listings for that handful of homes that owners can’t sell – so they’re listing them as rent-to-own.
Instead, you choose the home that you want, and you negotiate the purchase price that you want today. Even if you sign a three-year lease, you’re not paying 2020 real estate market prices. You pay a market price that you negotiate before you sign the contract.
Once you’ve found the property that you’ve wanted, you sign a lease purchase agreement. This includes the purchase price, the deposit amount (typically about 5% of the purchase price), and the amount of rent you will pay each month. You’ll also see the amount of your rent that will be credited toward your eventual down payment.
The goal is that, by the time you reach the end of the lease term, you’ll have enough money saved up for the down payment that you would need to qualify for your bank loan. You’ll already have lived in the home of your dreams for a year or two before you actually get to buy it – but even if real estate values have skyrocketed between now and then, you still get the purchase price that you agreed to at the beginning of the term. So don’t let dream house after dream house get away – instead, sign your very last lease with HOS Financial, and then go choose the home where you will create your future.