New homes for first-time homebuyers may be offering more opportunities for affordability due to the fact that property values have dropped over the past months and mortgage interest rates remain relatively low, but there are some concerns by analysts who feel that getting a new mortgage on a home can be more costly in some areas than before. One of the main arguments for first-time homebuyers or individuals who simply may be looking for a new home is the fact that, again, many homes are selling at a big discount and if a buyer has a decent credit score they may be able to lock in a low mortgage rate which could lead to a great deal of affordability when all is said and done.
However, there are some new costs that may have arisen due to fallout from the housing bubble burst and subprime mortgage crisis that both homeowners and banks are still feeling. According to reports, there may be more fees and costs associated with purchasing a new home and first-time homebuyers could be on the hook for a higher upfront cost.
According to SmartMoney.com, “…new fees and higher barriers to entry are all a response to the sweeping mortgage losses of the last several years…To cover those losses, banks and the agencies raising fees on new mortgages.” This is a follow-up to the statement that the fees on small-down-payment mortgages will see an increase in April, which obviously could be more problematic for some first-time homebuyers.
Essentially, there are some servicers who are requiring that new homebuyers put more money down on a mortgage than in years past, which again, may be more difficult for some as the upfront costs associated with closing could either delay some from entering the housing market until these funds can be saved or could stop the sale of a home if, again, these costs are too high. However, there are arguments that first-time homebuyers may still find affordability despite the fact that these costs up front could be higher. As an example, homeowners who pay more on their home initially may find that they can more quickly reduce the amount they owe on a home, and even if a home’s value does drop, they may be able to avoid a negative equity situation.
Yet, it is factors like continued decreases in property values in certain areas of the nation and these new higher down payment rules that may apply to first-time homebuyers that are reportedly causing some to reconsider purchasing a home. While there are also arguments that homeowners who may simply have to put more on down payment will, for the most part, not be scared away from purchasing a home that may be at a reduced value and come with the chance to lock in a low mortgage interest rate at the current time, there are still some analysts who feel that the cost of purchasing even an affordable home may soon be on the rise for these first-time buyers.