Joe Imel/Daily News Seth Massa is the poster child for the rising rate of young people buying homes for the first time. He recently financed a new home with Monica Wardlow, a mortgage loan officer at Republic Bank and Trust.

advertisement

Bowling Green native Seth Massa loves his house, and for good reason.

“I'm single and my bedroom is bigger than my parents' - something is wrong here,” he joked.

But there is no disputing that Massa is the poster child for the rising rate of young people buying homes for the first time.

The 2005 Housing Vacancy Survey by the U.S. Census Bureau shows the rate of homeownership among people younger than 35 increased 9.2 percent from 1995 to 2004, more than all other age groups and the total U.S. rate of 5.9 percent.

Affordable housing programs may contribute to the rise in homeownership overall, but do not account for the rise in first-time home buyers, according to the Regional Economist, a quarterly review of business and economic conditions.

In it, William Gavin, vice president and economist of the Federal Reserve bank of St. Louis, wrote about recent evidence that shows financial innovations can take the credit for people like Massa, who take advantage of lower down payment requirements and special mortgage contracts.

Massa graduated last fall from Western Kentucky University with a bachelor's degree in accounting and now has a job with the auditing division of Tennessee's Department of Treasury.

Massa mostly sits at a computer and deals with numbers to take home $2,300 a month - not bad for a 23-year-old.

“I audit everything that gets funding from the state of Tennessee,” he said.

The young auditor had no student loans after college.

Massa even took a year off from school to work, paying off his tuition bills as he completed his studies.

He recently financed a three-bedroom, two-bath house on Smallhouse Road with Monica Wardlow, a banking officer at Republic Bank and Trust.

Massa has already pre-budgeted his utilities, taxes and insurance, along with his mortgage payments, for the house he bought for about $89,000.

“I can't wait to move in, but (the seller) has to move out first,” Massa said.

Massa had heard about special deals for first-time homebuyers, and once he started going to banks, he found out about 100 percent financing, which didn't require a down payment.

That, coupled with a low interest rate and closing costs of $300 instead of the normal range of $2,000, was enough to convince Massa he could buy the home.

“It made it a lot easier,” Massa said, who didn't want to rent for decades and have nothing to show for it.

As a banking officer, Wardlow has seen more applications for 100 percent financing than she's seen in the past.

“It is important and it's a part of the American dream for people to own their own home,” Wardlow said. “A lot of people can afford to make the mortgage payment, but they either have not saved the money or don't have avenues to pay the down payment money.”

The neighborhood financing loan, which Massa has, allows a buyer to have 100 percent financing on a 30-year, fixed-rate mortgage.

Wardlow says when interest rates rise, so does one's mortgage payment in response to observations that the residential housing market is gradually “softening,” according to Federal Reserve Chairman Ben Bernanke's testimony to Congress at the end of April.

Because of rising rates, Massa feels fortunate that he was able to get the house of his dreams at a great interest rate.

In the same way, his friends are more apt to dispute the down payment myth and are now thinking of buying a house themselves, Massa said.

In the meantime, Massa doesn't mind making the commute to Nashville, and prefers to live in a smaller city.

“Bowling Green seems like it's growing,” Massa said. “If it seems like there is nothing to do now, there will be soon. I can wait until it happens.”

Wardlow has three recommendations for prospective home buyers.

First, do research on how to purchase a home.

“Don't be afraid to ask your lender questions on how one loan works over another,” Wardlow said. “Ask them to figure out the difference and see where the savings are.”

Wardlow thinks sometimes people don't ask enough questions.

Second, consumers should ask themselves how much house they can afford by taking into consideration their lifestyle.

“Take an inventory of yourself, and your spending beyond the car payment, mortgage payment and installment loans, to make sure you can really afford the home,” Wardlow said.

Third, don't be afraid of the short-term loan.

“If you don't plan to be in the house a long time, be upfront about it,” Wardlow said. “You may get a lower rate based on your situation.”

Massa encourages people to rethink whatever is holding them back from owning a home.

“Look at how much you pay in rent and look at houses that have the same in mortgage payments - why not own (the house) in the end?” Massa said.