If you were to ask random people on the street about their experience as first-time home buyers, you could be shocked by what you would hear. The ordeal people go through just to be able to zero in on a decent home is sometimes unimaginable. And this is worrisome because the desire to be a homeowner runs so much in everyone’s blood. You really can’t skip the process of getting one.
Indeed landing a home comes with its challenges. But zeroing in on one for the first time is a different ball game altogether. Statistics show that 3 % of homebuyers in the past years since 2003 were first-time home buyers.
Oftentimes many first-time homebuyers make the wrong choices that most may consider dumb. Top of the list is prioritizing car payments over owning a home. Another bad strategy is to not focus on acquiring needed cash to create a needed down payment. And if these challenges are not handled well, it could cost you a lot. Worst case scenario, you wouldn’t even be able to land yourself a home.
The good news is such a first-time experience can be a lot less stressful for you. Of course, doing your due diligence is the name of the game. When you’re about to make the biggest purchase of your life, it certainly pays to be in the know. Listed below are three of the biggest challenges most first-time homebuyers face and how to overcome them.
Inability to Raise Down Payment
It’s a given that when you want to get a house, you need money first for the down payment. In most cases, you would be required to pay upfront of 20% as the down payment which in many cases can be difficult to raise or even an impossibility. The good thing these days is down payments isn’t much of a hassle as they used to be.
Then again, scouting for the best deal in town is part of the game. A good rule of thumb is to widen your options as a first-time homebuyer. Getting the best mortgage rates means doing the needed research and getting yourself busy digging into the lowdown on each and every deal available for you.
At this stage, you need to be thorough. A mortgage is like marriage. It’s a long-term commitment so before you decide on which is best, do your homework and lay all the numbers out.
For one, there are great down payment options you can avail of. You can opt for an FHA loan that allows you to provide just a 3.5% down payment of the total price. Even better, you can as well opt for a USDA loan which is suitable for homes in certain rural places at zero down.
You have to be careful when opting for a mortgage plan. Ensure you ask all the necessary questions about the mortgage plan. There are plans with a particular annual premium, while for some, you may be required to pay something called private mortgage insurance.
The Issue about Affordability
It’s one thing to find a house, and it’s another thing to be able to afford one. And getting an affordable house these days has become hard considering the prices of houses are at the fastest pace currently in the last 17 years. But there’s always a way out.
The first step is to think outside the box when trying to get a property. Widen your options. For one, houses in rural communities are not as overpriced as those in the big cities. They come at an affordable price as compared to those in the urban areas.
Also, consider opting for a condo rather than a single-family home. This is because condos are not as expensive, and they also have reduced mortgage payments. The good thing with condos is that maintenance is simple in the long run. This would save you a lot of money as compared to getting a single-family home.
You can as well consider getting a multi-family rental property. With this, you can stay in a single unit and then collect rent from people staying in other units. The money you get as rent can be used to sort out your mortgage bill. And before you know it, you will be able to pay off your mortgage.
Insufficient Credit History
Credit history is everyone’s concern. A good credit history means higher chances of getting a good deal with lenders. As a borrower, expect the lender wants to be assured that you can meet up with payments. And a good credit score is gold in this sense.
So is it possible to get your mortgage approved with a bad credit score or none at all? The answer is yes. All you have to do is beat up your credit history into shape.
One way to do this is to ensure you make payments right on time. And that includes your student loan. By doing a little shaping up, you can improve your damaged credit score and increase the chances of getting a good mortgage deal.
The challenges that come with buying a home for the first time can be overwhelming. But it need not be that way. When you do your due diligence, getting there should be a breeze.