Overcoming Challenges When Purchasing a New Home

Harris Poll recently did a survey that reported eight in ten Americans said that purchasing a home is a priority. The survey also reported that 28 million Americans plan to purchase a home in the next 12 months. Unfortunately, only five million homes are projected to be sold in 2023 which means 23 million Americans will not purchase a new home due to home buying challenges they will face. Thirty four percent said they do not have enough money saved for a down payment and 30 % said their credit score kept them from mortgage approval. Here are ways you can overcome these challenges in order to make owning a home a reality.

A down payment is a big part of the costs and has to be paid up front when purchasing a home. The majority of Americans who are purchasing a home will need some sort of financing. This means they will need to save up for a cash up front down payment and take out the remaining through a mortgage. The rule of thumb is to put a 20% down payment on a home, however this is not always required. The 20% will be out of the purchase price of the home and according to the National Association of Realtors, the median down payment for an average buyer is just 14% and 6% for a first-time homebuyer.

If you are concerned about the process, you should choose a lender who can show you different options and help you with the right kind of financing. If you are worried about a down payment, some loans have smaller down payment requirements or require no down payment. An FHA loan will allow as low as a 3.5% down payment for some buyers while a VA or USDA loan requires no down payment for qualified buyers.

Remember when saving for a down payment, you need to factor in closing costs which will run around 2- 5% of the purchase price of the home. Also have more in savings than just your down payment and closing costs. You still need some money set aside in your savings for other homeownership expenses that might pop up unexpectedly. Even if you have a lender, do your research and always ask questions.

Another big hurdle when it comes to getting approved for a loan is your credit score. A credit score is a number that indicates how financially reliable you are to lenders.  So a higher score equates to a higher amount you can borrow and a lower interest rate. If you need to improve your score so you can get an affordable mortgage, here are some things to do. First start with paying all your monthly bills on time. Paying a bill late will negatively affect your credit score. A good thing to do to ensure your bills are paid on time is to set up automatic payments. Secondly you want to have a variety so to say on your credit report. Do this by having several different types of credit, such as auto loans, credit cards and mortgages.

If you want to purchase a home in the near future, you need to first start by contacting a local real estate agent. They can advise you on a good lender and help you with the process from start to finish.

Click Here For the Source of the Information.

Compare listings