Do you think there are just too many obstacles to buying your first home? Like any challenge in life, you have to make a plan to achieve your goals. Part of that plan will include overcoming any obstacles you may foresee.
Let's take a look at three of the most common challenges facing many home buyers:
1) Saving up your 20 percent down payment. Traditional mortgage loans require the borrower to put down 20 percent of the purchase price, leaving the lender to finance the remaining 80 percent. For example, on a $150,000 home, you would need to put down $30,000. That is a lot of money for many families.
This problem, however, is not without some solutions. Home buyers can tap into programs sometimes offered by their community, as well as state and federal agencies. In some cases, outright grants are available for those whose incomes qualify. In other cases, low-interest loans are made available. As your Realtor, I can direct you to what is available in this area.
And now is a great time to buy because home prices are down, and the State of California is offering a limited-time $10,000 tax credit for first-time homebuyers.
2) Improve your credit score to 580 or more. If you have a bad credit history, or maybe none at all, this is an obstacle but one you can overcome. You have to understand that this will take some time. Establishing credit or improving credit both require staying current with your payments, even paying off balances with each new month. By being diligent you should be able to attain a 580 credit score, which is the lower end of a fair rating.
3) It's best to maintain the same job for at least two years. Having a pattern of changing jobs every few months doesn't look good, so you will need to avoid that pattern. Changing jobs for the sake of a better paycheck is understandable, as long as you can show lenders you have a good work ethic. Be prepared to show at least two years of your most recent tax returns if you are self employed.
Do not let your work history become an obstacle to obtaining a home loan. Keep up a consistent employment track record. Consider staying with your current job, even if you are tempted to leave, until after you buy your home. Buying your first home may depend on your current work history, so do all that you can to raise your income and get promotions in your current position. The effort will be worth it. Later, you can change jobs and pursue other careers without affecting your mortgage.
While these are just some of the obstacles facing first-time homebuyers, by overcoming these three you will be well on your way to your first home.