REV clears path for aspiring first-time homebuyers facing affordability barrier

Housing and homeownership have long been cherished aspects of the American Dream, particularly for middle-class workers who form the backbone of the country’s labor force. However, the Charleston Metro Region is facing a shortage of available housing, worsening an already dire affordability crisis. This scarcity of inventory is driving home prices through the roof, making homeownership a distant dream for an increasing number of households.

According to a 2022 Housing Affordability Policy in the Charleston Metro Area survey commissioned by the Charleston Trident Association of REALTORS®, 76,000 households in the region faced housing cost burdens. While home sale prices in the area surged by 12.5% in 2021, the price of renting rose by a more concerning 14%. The soaring cost of renting and house prices is a troublesome issue because these expenses represent the largest financial burden for families, further aggravating the affordability crisis.

Not only does this situation strain affected families, but it also poses a threat to the local economy. With a significant portion of their income allocated towards housing expenses, families are left with little disposable income for other essential needs as the lack of economic freedom hampers their ability to contribute to the growth and resilience of the local economy.

REV, a community-minded organization, has stepped up to provide a much-needed lifeline for aspiring homeowners with StartSmart, a program that offers a path to first-time homeownership without the burden of a down payment or private mortgage insurance (PMI). Traditionally, prospective buyers are expected to have a substantial cash amount, typically around 20% of the total home value, as a down payment. For those unable to meet this requirement, PMI becomes an additional monthly expense on top of their mortgage payment.

StartSmart eliminates these financial barriers, freeing households from the shackles of down payments and private mortgage insurance premiums, allowing them to redirect their funds towards other vital aspects of their lives, including childcare, healthcare, and education. The eradication of these barriers provides homeowners with the flexibility to either save or spend in other areas, generating increased economic activity and tax revenue. Consequently, StartSmart brings broader benefits for households, the community, and the economy at large.

Beyond providing immediate economic relief for first-time homebuyers, REV’s StartSmart program is building resilient communities where individuals can have a stable and fulfilling life that goes beyond just owning a home.

When it comes to the mortgage process, there are many factors to consider, whether it’s your first or subsequent time. For first-time homebuyers, avoiding the following mistakes is crucial.

In the world of mortgage financing, not all lenders are created equal. Each lender offers different mortgage rates, so shopping for the best terms, interest rates, and fees can potentially save you a big chunk of change in the long run. By comparing offers from banks, credit unions, and mortgage brokers, you increase your chances of getting the most competitive deal. Also, consider the different loan types available, as they differ widely and can significantly impact the size of your monthly mortgage payment

Your housing payment is more than just your mortgage payment. If you’ve been dreaming of owning your own place, your fantasies probably didn’t include replacing an HVAC system, fixing a leaking sink, or discovering you have some termite guests. Once you make the leap and purchase your home, you’ll have to acquire homeowner’s insurance, pay property taxes, and, if you are part of a homeowner’s association, pay any associated fees. Many first-time homebuyers overlook these additional costs that accompany the mortgage payment. Regardless of how much the lender approves you for, always carefully review your income and expenses to make sure your entire housing payment is something you can comfortably manage.

While accepting a new job doesn’t necessarily mean you won’t get approved for a mortgage, it can potentially delay the application process. In part, this is because lenders want to know that your job and income are stable, so any major changes may raise concerns. This includes switching industries, changing the structure of your income (for instance, transitioning from fixed pay to commission-based earnings), or transitioning from a full-time position to freelancing. However, if an opportunity presents itself, it’s crucial to keep your loan officer informed to mitigate potential issues.

Before you start looking for a home, you should ideally have a pre-approval letter in hand. Having mortgage pre-approval or sufficient cash on hand is important in demonstrating your seriousness as a buyer. Not only does this set you apart from other potential buyers, but it also provides a clear understanding of the loan amount your mortgage provider is willing to offer. No matter the qualifying amount, it is crucial that you have an honest discussion with your loan officer about what you can genuinely afford. Oftentimes, you can qualify for a loan amount that exceeds what you’re actually comfortable with.