You’ve likely heard the term “affordable housing,” and you also likely assumed it had something to do with a government program for low-income families. But actually, that’s incorrect. “Affordable housing” is a term used to describe housing that’s affordable, no matter what your income level is, and the U.S. government deems “affordable housing” to be at or below 30% of one’s income. That can make a big difference if you’re working at an entry-level job or if your income level is so low that it doesn’t allow you a lot of flexibility.

 

Image: Diana Parkhouse via FlickrCC

Image: Diana Parkhouse via FlickrCC

When Emily Garrison, 26, decided she was ready to buy her first home, she was drawn to Nashville’s Germantown neighborhood. She knew that honing in on a price she could afford was a necessary step, but it was also surprisingly time-consuming due to her inexperience with the process. “I asked a lot of questions and spent a lot of time mapping out my finances,” she says. “I took a close look at how my monthly payments would look, how much that would leave for the necessities (such as groceries), and how I could still prepare for the unexpected scenarios, like a leaking pipe.” It’s that type of forethought that makes Emily a smart first-time homebuyer whose overall experience was a good one. “Thanks to the right guidance, it was more or less a painless experience,” she shares.

If your child is a young adult considering purchasing a home for the first time, educate them on affordable housing to ensure that their first purchase is a positive experience and not a discouraging one or worse, one that gets them in over their heads. Here’s what you need to know.

The Current Housing Crunch in Nashville

It’s an interesting time to buy a home in Nashville. For months, the demand for housing has almost outpaced supply, most notably in the more affordable price ranges, and that’s reason No. 1 that you need a quality realtor on your side. “Working with a knowledgable realtor was key. I tend to overthink decisions and take way too long to commit to anything, but this was a decision I felt confident in making, thanks to both my realtor and my financial advisor.”

“The top has blown off of real estate in Nashville,” adds Elise Gworek, Vice President of Commercial and Private Banking for Landmark Community Bank. “Everyone wants to come here and be here.”

Underscoring that notion, home sales in July 2017 were up 4.5% year over year, according to Greater Nashville Realtors, and the inventory of homes, condos and lots was down from the same period last year. No one is yet sure when the housing market will cool off.

“I don’t think it’s going to be ending anytime in the near future,” Elise says.

That can make it challenging for someone on a tight budget looking to buy a home in certain areas of Nashville, but that doesn’t mean it’s impossible. “I did my research so as to not be surprised by what the market had to offer,” shares Emily. “I also considered how my property could appreciate over time. It’s likely that my first home is not my forever home, so I took the potential growth of the area into consideration.”

Affording a Mortgage

Many young adults just starting out on their own may think that buying a home is an impossible dream in today’s housing market, but it’s not. You just have to know your options and work with knowledgeable lenders. For example, Elise at Landmark says they have an option called the Affordable First Mortgage, which is specifically designed to help people who dream of buying a home but worry about being priced out of the market. It’s a 30-year, fixed-rate mortgage designed to address some of the affordability hurdles buyers may encounter, such as scraping together a down payment. “You may only need to put down 3% — versus the typical 20%,” says Elise. With an option like this, buyers on a fixed income have a better shot at homeownership. “It’s a really good product for those who are just starting out, maybe recently out of college, a retiree or for someone who recently went through a divorce,” Elise adds.

If the Affordable First Mortgage program isn’t a good fit, Landmark has other mortgage product options. “We do our best to tailor loans to people for their specific needs,” says Elise. “We just happen to have some specific products with very specific parameters that we’ve put together. But even if those don’t necessarily fit their needs, we want to talk to them. There may be another way to finance them into a house.”

If you or a loved one are looking to buy your first home, contact the professionals at Landmark Community Bank to see what options will help put you in the home of your dreams. Click here for more information.

This article is sponsored by Landmark Community Bank.