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What Best Places to Live Are Ideal for First-Time Homebuyers?

By U.S. News & World Report

The 2017 Best Places to Live rankings aim to help people determine where they should live in the U.S. based on dozens of data points incorporating cost of living, job market, crime rates, commutes and more.

Of course, it’s a given that personal preference also comes into play when finding your perfect next city, in addition to specific circumstances — such as the industry you work in or whether you’re starting a family — that may change how you weigh different pieces of information.

Last month, real estate information company Zillow took a stab at ranking which of the 50 largest markets in the U.S. would be most ideal for first-time homebuyers, and it released a report noting the 10 best and worst markets for this group.

[See: 7 Things First-Time Homebuyers Wish They’d Known.]

Zillow based its calculations on five metrics: a lower median home value; strong home value forecast; high inventory-to-household ratio; buying being more lucrative than renting; and a less competitive market based on the share of active listings that see price cuts. The top 10 list includes Memphis, Tennessee; Oklahoma City; Tampa, Florida; Las Vegas and San Antonio. You can see the full list here.

While other markets may offer more to homebuyers on a case-by-case basis, the conditions in these cities make it easier to purchase a house without already having equity built up in another home. For example, the Zillow report notes that a 5 percent down payment in the San Francisco Bay Area is larger than a 20 percent down payment in most markets in the top 10.

So what else makes these markets great for first-time homebuyers? We zoomed in on three metro areas to see what they offer and what challenges buyers may face when jumping into homeownership for the first time.

[See: 7 Things You Can Do to Win a Bidding War.]

Memphis
Zillow’s Most Favorable to First-Time Homebuyers Ranking: 1
U.S. News Best Places to Live 2017 Ranking: 93

At No. 93 on the Best Places to Live ranking, Memphis has a job market that leaves something to be desired. Its median annual salary is $41,880, a little over $6,000 below the national median, and its 5.2 percent unemployment rate is slightly higher than the national average.

But the cost of living remains proportional to the lower average income, as Memphis residents spend less than 30 percent of the blended annual household income on housing, utilities and property taxes.

Jennie Sampson, Realtor and vice president of Crye-Leike Real Estate Services in Memphis, recommends buying over renting in the Memphis area regardless of whether the market is down or up. She notes the area’s affordability, combined with equity you develop while making mortgage payments, makes homeownership a stronger investment in the long run.

Between 2011 and 2015, Memphis saw a population loss from net migration of 1.53 percent. For a first-time homebuyer looking for more options, a decreasing population can mean the difference between landing your perfect home for a little below asking price versus getting swept up in a bidding war with many eager buyers.

Homes are certainly available, but Sampson notes that the house-hunting process and figuring out what first-time buyers want in a home is relative to what they can afford.

“They can always find a home — sometimes they have to be realistic, and there has to be a few weeks of different houses that they might look at to see this is what the market will afford them,” she says.

Tampa
Zillow’s Most Favorable to First-Time Homebuyers Ranking: 4
U.S. News Best Places to Live 2017 Ranking: 35

First-time homebuyers who like frequent beach days are in luck, as Tampa also makes Zillow’s list for best markets for first-time homebuyers. But like most markets in the U.S. currently, don’t expect buying to be a breeze.

Homebuyers looking for homes on the lower end of the market, below the current median price of $183,200, per Zillow information, may find themselves priced out of the market in Tampa, says Oliver Orlicki, a licensed mortgage originator and team leader for the Orlicki Group at Innovative Mortgage Services Inc., which issues mortgages throughout Florida.

He notes few houses are selling for below asking price in Tampa. But once you lock in your purchase, living in the metro area is easy. “The Tampa Bay area, in terms of affordability overall, … it’s probably one of the best markets I’ve ever been involved with from a lending perspective,” Orlicki says.

Despite seeing strong growth in population over a five-year period — 6.08 percent from 2011-2015 due to net migration — the cost of living in the Tampa metro area remains relatively low, which makes it a solid choice for individuals looking to purchase without exhausting all their savings and income.

San Antonio
Zillow’s Most Favorable to First-Time Homebuyers Ranking: 10
U.S. News Best Places to Live 2017 Ranking: 23

As the highest-ranking Best Places to Live metro area to make Zillow’s top 10 list for first-time homebuyers, San Antonio is experiencing rapid population growth while also enjoying a low cost of living and low unemployment.

As evidenced by the 6.63 percent population growth between 2011 and 2015 due to net migration, San Antonio is attracting many new residents. As the area’s population continues to grow, home values can reasonably be expected to rise, meaning a home purchase now will likely yield a high return when it comes time to sell in the future.

With growth like that, first-time homebuyers should expect some competition for properties on the market. But like Tampa, once you do own a home, you have the upper hand with affordability and a strong likelihood that real estate values will continue to climb.

[See: 10 Terms First-Time Homebuyers Must Know.]

Prepare for Your Purchase

Whether you’re in Indianapolis, Memphis or San Francisco, buying real estate for the first time will likely be intimidating, especially if you don’t seek additional guidance from professionals willing to walk you through the details. For example, Orlicki says he often works with clients who aren’t aware there are mortgage programs allowing them to buy a house with less than 20 percent down.

“When [first-time buyers] have to go out and purchase their single largest asset, they typically are confused, so we try to educate them from the minute they talk to us to the minute they close,” Orlicki says.

The first steps in homebuying deal with all the less glamorous financial factors rarely highlighted on TV shows. Sampson stresses that before you find the house of your dreams you should:

— Get prequalified (or preapproved) for a loan, which will help to set a budget. This includes providing a lender with all details on existing debt and income.

— Provide your real estate agent with a list of desirable features and amenities for the home, including neighborhood, number of bedrooms and bathrooms, and architectural style.

— Discuss with your agent where your budget and wish list may line up and where they diverge.

“That’s part of the education process. They have to see enough [houses], whether it’s online or in person. They have to see this is what kind of bang they can get for their buck,” Sampson says.

More from U.S. News

The 25 Best Affordable Places to Live in the U.S. in 2017

The Best Places to Live in the U.S. in 2017

The 25 Most Desirable Places to Live in the U.S. in 2017

What Best Places to Live Are Ideal for First-Time Homebuyers? originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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