Florida Mortgage Options For Affordable Housing Seekers
House prices are coming down. But have they fallen far enough to be within reach of a single, first-year teacher on the Treasure Coast? Depending on individual circumstances, the answer is yes… maybe.
Using two hypothetical budgets, here is a look at the home buying potential for rookie teachers. Financial information, obtained via local Florida mortgage brokers, involves conventional, 30-year fixed home loan at 6 percent.
No interest-only, bad credit Florida home loans or other gimmicks.
SCENARIO NO. 1: THE SINGLE TEACHER
A single teacher could stretch to afford a $120,000 home — if she qualified for a $20,000 down payment grant as a “moderate-income” household through Florida’s State Housing Initiatives Partnership program.
The teacher would apply the subsidized-housing funds toward a down payment and closing costs. The funds are an interest-free Florida home loan, which is not repaid until the home is resold.
Even if the full $20,000 weren’t available, a Florida mortgage broker believes the teacher could still afford a $100,000 condo, with a monthly mortgage payment of around $860 a month (taxes and insurance included).
Depending on the buyer’s credit and existing debt, local mortgage brokers say that a Florida mortgage lender is willing to fund up to 40 percent of their gross income ($1,100/month in this case). More commonly for a first-time buyer, the ratio runs about 30 percent ($825).
With local rentals running between $700 for a modest apartment (and zero return on equity) and $1,500 for a 3/2 home, the purchase option appears like it’s more attractive, and increasingly likely.
SCENARIO NO. 2: MARRIED, NEW TEACHERS
The married-couple scenario envisions two first-year teachers shopping for their first home. The couple does not qualify for SHIP assistance, but public-employee and Fannie Mae funding are available.
Even doubling the pre-existing debts from the first example, brokers say that this couple should be able to swing a $150,000 Florida home mortgage, and possibly quite a bit more because of their doubled salary.
In one recent, real-life example, two first-year teachers pooled their resources to purchase a $200,000 house in Indian River County.
With a 10 percent down payment, the couple qualified for a monthly Florida mortgage of $1,480 (taxes and insurance included).
Footnote: Six months earlier, the 2-year-old home was listed at $275,000.
BOTTOM LINES
Whether housing prices go up, down or sideways, young teachers have options — even without the creation of new government subsidy programs.
Ultimately, prospective buyers expand or limit opportunities by the choices they make. First-year teachers can enhance affordable housing options by:
– Living within their means. Dine out less often, watch cell-phone bills, eschew new vehicles.
– Avoiding debt in general. Interest — not housing — is Americans’ biggest single expense. For every $100 in revolving debt, a prospective buyer loses thousands of dollars in Florida mortgage eligibility.
– Exploring all forms of home buyer assistance (programs listed above are not intended to be a complete list).
– Working a summer job. Can’t cut any more expenses? Generate more income. School’s out from mid-May until mid-August.
– Getting married; taking on a roommate. Two can live cheaper than one.
SINGLE TEACHER
Salary: $33,000 ($2,750/month)
Pre-existing debt:
- College loans: $200/month
- Car payment: $200/month
- Credit card: $250/month
Funds available:
- SHIP: $20,000
- Florida public employee: $3,500
- Fannie Mae & FHA: reduced down payment, looser credit requirements.
Affordable housing range: $100,000 and up
MARRIED TEACHERS
Combined salary: $66,000 ($5,500/month)
Pre-existing debt:
- College loans: $400/month
- Car payments: $400/month
- Credit cards: $500/month
Funds available:
- Florida public employee: $7,000
- Fannie Mae & FHA: reduced down payment, looser credit requirements.
Affordable housing range: $150,000 and up
SOURCE: TCPalm.com
