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Cost of Living: Central Indiana home buyers trade rent for equity, pride

Purchase a home with 3% down payment, experts say
Posted at 4:23 PM, Oct 17, 2017
and last updated 2017-10-18 11:44:50-04

All this week in our Cost of Living series, Call 6 Investigates Kara Kenney is digging into expenses that impact your daily life.

INDIANAPOLIS --  A new report shows it is a seller’s market in Central Indiana, as prices continue to rise and the number of homes for sale is shrinking.

But buying a home may not cost as much as you think.

Noemi Cifuentes just bought her first home, located on the east side.

“The size is perfect,” said Cifuentes. 

The single mother of three had been dreaming about buying her own house after nine years of renting.

“I want to give my kids a home where they can say this is our house, rather than, this is a place where we live,” said Cifuentes.

The purchase price of the home was $110,000, but Cifuentes said her down payment was about $2,000.

Cifuentes worked with the Indianapolis Neighborhood Housing Partnership (INHP), a nonprofit that helps Hoosiers buy a home.

INHP homeownership advisor David Bryant said it’s a misconception that you need a 10 to 20 percent down payment to buy a house.

“Typically you're looking at 3 percent of a home,” said Bryant. “So, if you want to purchase a $100,000 home typically you need to have about $3,000 saved for a down payment."

Bryant said you do not need sparkling credit to buy a home.

"Clients will walk in and say what do I need my credit score to be approved for a home loan, and there's really no answer to that," said Bryant. “Financial institutions dictate for their loans what they want your credit score to be.”

Buyers in Central Indiana are having to hustle to get a good deal, as the inventory shrinks and home prices increase.

Records show the median sales price is up 7 percent to $169,500.

First Internet Bank President and CEO David Becker said you can use online calculators to figure out what you can afford.

"If possible, get pre-qualified,” said Becker. “Most financial institutions will pre-approve you for a certain amount. It makes the buying experience much smoother.”

Becker said going through the pre-qualification process will help you avoid the McMansion you can’t afford.

Becker also said you should shop around for a lender, using sites like Lending Tree and Bankrate, which do a side by comparison.

“Don’t always focus on rates,” said Becker. “Sometimes closing costs and incidentals will more than compensate for the rate.”

It’s also important to remember all the extras that come with buying a home including homeowners insurance, and all the things your landlord used to fix like air conditioners, roofs, and hot water heaters.

Cifuentes’ mortgage payment is just over $700 a month, similar to what her rent was, but now she’s building up equity and a legacy.

“It will be mine, and it’s something where I can say ‘this is for you, children,’” said Cifuentes.

Cifuentes and her children do things at home to save money, like play games, watch TV and cook together.

Cifuentes plans to budget and work one or two jobs so that they can keep their house.

She encourages other people to make small sacrifices to make their dreams come true.

“You just have to show yourself that you really want a house,” said Cifuentes.

Experts told Call 6 Investigates the best way to keep your home is to pay your mortgage on time, of course.

If you can’t, talk to your lender about your options.

INHP also helps its clients who have closed on an INHP home line with crisis budgeting strategies so they are able to stay in their homes.

The nonprofit also offers classes on buying a home to help you get started. 

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