Challenges Facing First Time Home Buyers (And How To Avoid Them)
November 7, 2017According to the National Association of Realtors, first time home buyers made up 35% of buyers in 2016. While that smaller number may surprise you, the other stats for first time home buyers may not. With Millennials hitting the market, the median age for first time home buyers is 32, 58% are married, and the median price the first time home buyer’s new digs was $182,500. But today’s housing market can be tricky and many of those looking to buy their first home are finding themselves wondering where to start. Below are tips that can help guide you through the process, to make that big step a little easier to manage.
THE DOWN PAYMENTFor many first time home buyers, coming up with a down payment can be what makes or breaks the idea of buying their dream home. Let’s look at that NAR metric, if the median home price for first time buyers in 2016 was $182,500, how much should you put down? The time honored adage is 20% but that can be a big chunk of change for many just starting out in life. Using the example, twenty percent would be a little over $36k. That amount may be unattainable for many, especially those under 34 who are likely still building their careers. Luckily there are many programs out there to help. At Semper Home Loans, we help qualified first time home buyers get down payment assistance through a special RI program called First Down. With up to $7,500 in downpayment assistance, it’s something worth looking into and could make the difference between making an offer or having to walk away. If you’re outside of Rhode Island and need some help with a down payment, check out the FHA’s list of assistance programs by state.
CREDIT WHERE CREDIT’S DUEA big problem facing many first time home buyers is their credit score. Since first time buyers tend to be younger, many may not have a long established credit history. According to Realtor.com, the reported need for prospective buyers to improve their credit doubled in 2016, affecting almost 20% of those surveyed. Credit plays a huge role in getting approved for a home loan, so what can you do to make the process a little easier? Well first, check what your credit score actually is. Look for any errors that might be bringing your score down and start the process to dispute them. Another tip is to try to chip away at any outstanding debts to improve your score. Something those new to the home buying process might not realize as well, is that it is important not to create any other new credit activity. When you apply to open a new line of credit, the lender will run a hard inquiry, which can temporarily drop your credit score. In an effort to help your credit look as good as it can when apply for a home loan, try to hold off from things like opening a new card or buying a new car with credit.
MISSING OUTIn this fast paced market, where most homes are selling at lightning speeds, many first time home buyers find themselves left in the dust. Due to inexperience in the home buying market, many first time buyers skip a crucial step in making their dreams a reality: meeting with a lending company. While sitting down with a home loan company doesn’t really sound like the most fun part of home buying, it can greatly improve your success. Having an experienced professional in your corner can help you narrow down a budget, figure out a feasible down payment, and get you started for pre approval. Not only will you be able to narrow your scope, but with pre approval, your offers will be taken more seriously by sellers. This will help you get the right home for you easier and avoid that feeling of missing out. For all of these challenges, Semper can help. The home buying process can be tough, and a lot of it can seem daunting, but armed with the right information and the right plan, buying your first home can be made a little easier. Let us help you get home faster!
Categories: First-time homebuyers