If you are just starting in life and trying to get your footprint in the real estate climate; the information in this post is for you. Everyone must start somewhere and buy that first home. That first home is always the big one it is by far the hardest and most emotional. It can also be exciting, stressful, and euphoric all at the same time. A first-time homebuyer, these days unfortunately is not all that it is made up to be. Here is the reality of what you should be considering if you are a first-time homebuyer.
A first-time homebuyer in the eyes of a mortgage company is anyone who has not owned a primary home in the last three years. Here is the reality of what the first-time homebuyer means. It’s your first house it’s nothing more than that, unfortunately. The tax credits and the programs that were specifically for first-time homebuyers several years ago have all since mostly evaporated. There are programs out there; state grant programs, and down payment aid programs; that do provide the ability to come in with little or no money down. But let us take a step back for a second and look at the bigger picture. If you are a first-time homebuyer with good credit and have a respectable job. You also have little or no monthly debt, but you do not have any savings. Quite honestly you should not be buying a home. The reality of it is buying a home is something that requires careful meticulous consideration. It also requires a good foundational platform. Including favorable income, a respectable job, and a credit history.
If you bake cookies and you use too much sugar, they’re not going to come out right. Same thing with mortgages. You must have the right blend of cash, credit, and income to successfully buy a house in this 2022 real estate climate.
This means using the money for example from a 401K. Another thing you might have the ability to do is ask a friend or a family member for financial help. Getting a cosigner or getting a gift from someone could be a good platform. Especially if this is a trusted person in your life who wants to see you succeed. If those are not options stop looking for a house and work on saving money to better your income situation. Buying a house is not for everyone and it might mean that you can do it just not right now. You need to work on your credit. You need to pay off a debt, or loans, or lower your credit limits. Whatever the case is you want to work with a mortgage lender that can articulate where you are right now and help create a path for where you are going.
Trying to fit you in on a state-specific down payment program just because you can afford the mortgage payment does not necessarily mean that you should consider it. Let us say you can qualify for a state-funded down payment aid program, it is true you might be able to buy a house with little down. You also must have money for closing costs. Meaning you might have to get a seller credit for closing costs. The 2022 real estate market presently is not supportive of getting seller credits. A low supply of homes on the market on a national level also means you’re going up against other offers that are putting more money down or coming up with the money for closing costs. This is a reality of first-time homebuyers looking for down payment aid programs or a way around the traditional formula end up realizing. This is ok because everyone must start somewhere.
The first-time homebuyer program can get your foot in the door if you have a down payment. Money for closing costs is 3% down the conventional loan or 3.5% down the FHA loan. If you are a military veteran a 0% VA loan is an option. Provided that you have money in the bank. The number one thing is money in the bank that will help you buy a house. Start a 401K, an IRA, or a tyrant account. Not all but most employers will help contribute to such accounts. These are absolute accounts that you can borrow from without any interest or penalties to buy your first home. Wait, and in the future get a lower interest rate and put yourself in a much better financial position. You want to work with a lender who understands where you are right now and can help articulate a plan for you in the future.
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