Friday, December 4, 2009

Home National Sports Business Lifestyles Religion Arts & Culture Pulse Spice Editorial letters Opinion Foodie Sportscope Real Talks Weekend Report PDF's Classifieds Contact About Us Archive Weather

The ultimate goal By SHAVAUGHN MOSS ~ Lifestyles Editor ~ shavaughn@nasguard.com: Doreth Smith has a dream — and that is to one day own her own home, but the steady escalation of property prices in The Bahamas makes it seem that her dream will remain just that — and not become reality. Smith, is just one of thousands of people throughout the country who have a goal of moving from paying rent to purchasing/building a home. For the 30-year-old single mother of a three-year-old son, the thought of home ownership is that much more important as she strives to put a roof over their heads. Unlike many people who just dream and make no effort to save the requisite five percent plus closing costs that most financial institutions ask for, Smith is doing it all — dreaming, saving and for the past three years — looking for the place that she can afford. She estimates she would need a down payment of at least $20,000. To date, she has half that amount stashed away, but admit it's been challenging. From time-to-time she's had to dip into her savings to pay for unexpected bills, but she says her sights are focused on the prize. "It's challenging when you're already living on a shoestring budget and have other financial obligations . . . and we're not talking about taking trips to Paris or London. We're talking necessities — food, light, water." Over the past months as a buyer's market emerged in the United States as the real estate market "tanked" and some people wondered whether that trend would emerge in The Bahamas market, and help them with an easier path to home-ownership, it was not to be. The Bahamian market remained unchanged and real estate prices remained high. The U.S. housing market is now said to be on the rebound, and whether or not local real estate prices will again be driven higher remains to be seen. For people like Smith, who aren't looking for a huge piece of property or a mansion for a house, the struggle gets tougher. She's no longer looking to build as she believes the ideal solution for her is to now purchase a house and lot package. "For me, it makes no sense at my age to purchase a piece of property, because my monthly payments would be anywhere from $500 to $900. That means I have to take the $10,000 I have saved and turn that over into banking fees, lawyer fees, and at the end of the day still paying a $500-plus monthly fee, and have to wait five years until the age of 35 to possibly hear a financial institution say to me that even though I've built up the equity, they cannot extend to me a mortgage, because of my salary. To me, it's most beneficial to purchase packaged property." The drawback for Smith who falls in the $30,000 to $40,000 salary bracket is that she qualifies for just $100,000. "I've found that somewhat discouraging but in the midst of the discouragement I still have to persevere, and save, and hope that my day will come. The government ministry employee says she's not the only person struggling to own a home. She has friends who are working in the private sector, who earn salaries that are beyond hers, who still have the same challenges. "We are the generation that was said to have been more developed than our parents and grandparents, but when you look at the full scope of things, progression has taken place in education and professionalism, but we can't seem to possess what your parents or grandparents did. We say that we are interested in Bahamians owning a stake in the land and having their own home, but how realistic is it becoming?" She says more parents need to encourage their children who have graduated from high school and college and are in the job market to save first, and purchase something that appreciates in value, rather than something that depreciates. This is an ideal she expects to "pound" into her son. She also rues the day when he has to purchase property for himself - if she isn't able to do it - and get a head start in life. "As a single parent, at the end of the day, I'm aware of the frustrations that I'm going through to ease his burdens. As he comes up, how financially feasible is it for me to lessen his burden if I have a challenge in putting a roof over our heads?" It may not happen tomorrow, or even in the next 12 months, but the one thing Smith is certain of is that she will one day have her own home. A mortgage loan officer at a leading financial institute (who requested anonymity) says many Bahamians who were hoping the decline in the U.S. housing market may have affected The Bahamas in some way and helped them realize their dream of home ownership were in for a rude awakening. The local real estate market she says hasn't seen a drop, and the same prices that were being quoted five to six years ago remain the same, and in some instances have gone higher. She also said that in recent times, there have been quite a few more persons being turned down for mortgages, simply because they did not plan. "You have to do some [cash] injection, even though some institutions are advertising zero-dollars down. When you don't do any injection that does have a toll on you, because the mortgage payments are higher, and it takes longer for you to see any equity." Her best advice is for you to save something, no matter the amount of money you make, so that you would have something to go to the loan officer with. Another major advice she says is to remain realistic in what you hope to purchase, advice she says a lot of Bahamians don't heed. "They want the triplex which costs more than the single family home, but, especially if you have a child, if you get the single family home now, you can make bigger steps later. No one says you have to go directly to the top of the mountain when you're first starting out, but a lot of Bahamians want it all one time." The mortgage loan officer also says persons seeking a mortgage should remember that their income limit, which should service all credit payments is 45 percent of their monthly income. "If you're already paying out 60 percent of your income, you cannot get a mortgage — that's the reality of it." Another major headache for loan officers are those persons who come to them seeking to purchase a home or property, and have a balance of $30,000 to $40,000 from a previous loan which they think the bank should absorb, because they have their five percent and closing cost. "When you add the amount that we're absorbing, to the 95 percent the bank can finance, then the bank is going to be over-advanced, because banks qualify on the lesser of the appraisal. So if the house you want is appraised at $200,000, and you're buying at $180,000, and you only put five percent of that $180,000 in, and you want us to take over that $40,000, that 95 percent, plus that $40,000, loan you already had, we're lending you way more than the property is worth, and banks won't put themselves in that position," she said. Besides necessities like light, water and rent, the mortgage loan officer says you should go to your bank of choice with a clean slate, when you're ready to purchase property or build a home. Tuesday, November 1, 2009