How To Overcome Obstacles To Buying Your First Home
Today, a first time home buyer faces many obstacles when purchasing their first home and I want to shed some light on how to overcome these barriers to homeownership.
- Credit-The first thing you should do is run your credit and check the report for accuracy and dispute and remove items from your credit report which are erroneous. The minimum credit score for most first time home buyer programs is 620. Checking your credit online yourself does not affect your credit score. Some first time home buyers don't have much credit at all which is okay for the USDA zero down rural program and maybe the FHA program. If you have bad credit you may want to consult a professional to fix your credit. The Lexington Law firm can help you fix your credit and improve your credit scores so you can qualify for the program. You can contact them at (855) 255-7001 to take advantage of their no-obligation offer and credit repair solutions. Also, you can visit their website at LexingtonLaw.com.
- Debts-First time home buyers need to complete a budget of their income and expenses to figure out how much they can afford to pay on their monthly mortgage payment. Next, you need to calculate debt ratios for maximum mortgage and debt payments. The mortgage debt ratio should not be greater than 29% and the total debt ratio should not be greater than 41%. Note, the maximum mortgage payment you qualify for may be less than what you think you can afford. If the mortgage ratio is greater than 29% then you may need purchase a lower priced home or possibly the same priced home with lower property taxes. If your total debt ratio is too high then you may need to pay off some debt and you should do this prior to searching for a home. Another issue which comes up frequently is that one of two borrowers has poor credit and they want to use the income of that borrower to qualify for the loan. All borrowers must have the minimum score to qualfy for the first time home buyer program. Finally, you should check out all your loan options to determine if you can get the mortgage payment in an acceptable range. Get Pre-Approved and ask your loan officer for a side-by-side comparison of different loan programs and costs.
- Income-Every borrower must show a 2 year work history unless you just graduated from college You will need to provide 30 days of pay stubs and 2 years of tax returns with W2 forms. Overtime, bonus, and commission income will be averaged over the last 2 years and it very important to find out from the HR or accounting department the breakout of overtime, bonus, and commission for the last 2 years. Also, if you change jobs in the same field and receive an increase in hourly or salary pay then we are able to use this income right away to qualify for the program.
- Assets-One of the biggest barriers to homeownership is money. You may need some funds for down payment, closing costs, and upfront expenses such as appraisal and home inspection fees and good faith deposit to hold the house you want. You need to consult a first time home buyer loan expert to go over which down payment and closing options will best suit your financial needs. There are still some zero to low down payment programs and some or all of the closing costs can be paid the seller. Finally, some programs allow you to get 100% gift from a family member or friend.
- Homes For Sale-Today, the housing inventory is low in most states which makes it more difficult to find a home and get an accepted offer. You must have a lot of patience and determination to become a homeowner and you must compromise on your wants and needs for a home. For example, you may want a hot tub but you don't need it. In most areas of the country, a seller's market exists which means there are more buyers than sellers and you need to have a professional Realtor assist you in the purchase of your first home. A Realtor can provide you with property listings, round the clock advice, and negotiate a price that works for you. Fill out the Realtor Finder Form and FirstHomeBuyers will have a Realtor in their network contact you for a consultation.
There are many barriers to homeownership just as there are many obstacles to finding a good job these days but through perseverance you will find the right home and achieve the dream of owning a home