Questions For The First Time Homebuyer

August 21st, 2008

Many potential first time home buyers are wondering what to expect when they approach a lender given the latest developments in the whole mortgage mess we are in.  Will the required down payment be more than 5 – 10%?  Are there any 0% down payment programs out there for first time homebuyers anymore?  How does the first time homebuyer sort through all the changes that are taking place anyway?

 

Many first time home buyers have these questions as well as other pertinent questions on their minds.  This is in part because of the current credit crunch that the United States is experiencing.  The answers?  Yes, there are 0% down payment programs available for the first time homebuyer still; however, many have stricter qualifying regulations.  Being aware of the changes in the rules can help avoid stress and confusion during the buying process. 

 

One of the first and most important things to consider is that credit scores are more important today then they ever have been.  Chances are if you have any blemishes on your credit score at all a lender will not want to extend a 0% down payment loan to you.  Therefore, before even beginning the process of pre-approval or shopping for homes and or lenders you will want to pull your own credit report.  You can actually do this once a year for free from each of the three main credit agencies.  Look at the report to see if there are any items listed that need your attention.  Dispute anything that is not correct, if something has been paid in full but is not reported as such you can have that changed before a lender looks at the report.

 

You are likely to find that lenders are getting rather restrictive on a whole and particularly with the ratios that they use when qualifying for a loan.  For instance, if you need private mortgage insurance, which is generally required for people who put less than 20% down, then the private mortgage insurance company might require a larger down payment.  They may simply allow a smaller ratio as well; this will end up lowering the total amount that you are able to borrow.  It is competitive today and despite the fact that people want and need to move the huge number of available homes off the market lenders want to make sure they will not be foreclosing on a home because of defaulted loans too.  Fully understanding all the rules and doing the foot work first is very important in this tougher mortgage environment; however, doing so will put you ahead of the game and help to secure your mortgage and your first home.

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Hold Out Or Buy Now?

August 20th, 2008

Can the financial news get any more depressing? We are being reminded constantly by the media of who bad the economy is and you may be feeling that now would be a bad time to consider buying that first home. Gas prices are near record highs and inflation continues to increase faster than our incomes and the jobs are going by the wayside every day not to mention that real estate is being pounded by adjustable rate mortgages that are beginning to reset and result in higher payments and an increase in foreclosures. With all of these things is it really a good time to buy a house? The answer is absolutely!

It is true, many will tell you that the outlook to buy a new home is grim at best and reports say that existing home sales will decrease nearly 7% this year. Additionally new home sales are decreasing about 3 times that and it is getting so desperate that some developers are offering unique and extravagant deals on homes including two for one deals. Still, if you have available funds to secure the financing this is a great time to take advantage of all the incentives and buy that first home. The housing crisis is more of a problem for the individual who needs to sell an existing home before being able to buy a new home; for the first time home buyer they avoid that and can just buy.

No funds right this minute? That is probably OK because the housing problems is expected to continue for the next 2 - 3 years and therefore you have time to prepare. There is currently and is expected to continue to be a significantly higher number of available homes than qualifying buyers. This means that the first time home buyer who has good credit and a down payment can benefit with a large choice of homes that are selling for great prices; a market view that is called the buyers market.

Buyer’s Market

A large number of homes for sale, fewer people buying homes, home prices dropping continuously and interest rates not out of control yet; these are just a few incentives to buy now. Throw into the mix the deals and incentives the developers, builders and real estate agents are adding to the mix to try to move the homes and move new owners in and the tax credit from the government and how can you not buy now? Still not sure if you are ready? Ask yourself a few questions: Is your credit score in good shape or can you easily raise your score? Do you have assets that you can liquidate to get a down payment? Do you qualify for the incentives? If you answered yes to these questions you could be moving into your dream house this year. Additionally, with the buyer’s market you are almost guaranteed to be able to buy more house than in years past. So stop holding out…buy now!

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Finding Your First Home

August 19th, 2008

Chances are, if you are a potential first time home buyer you are looking at the market and the incentives and are ready to take advantage of them and become a first time home owner. There are many areas that are facing depreciation and these locations offer some great incentives to buy. Take note, this is not happening everywhere. Some places, such as Seattle, Atlanta and Dallas are not depreciating like the areas of some parts of California, Florida and Arizona. In the areas facing depreciation it is not uncommon to find homes that once were selling for nearly $450,000 last year to be on the market today for a hundred grand less, and still not selling. It is also not uncommon to find the homes that are selling are doing so at around 70% or less of the homes appraised value because it has taken so long to sell. Many of the homes selling today are actually selling for less than what was originally paid. This is a pretty good argument as to now being the ideal time to buy that first house. It is actually easier to buy a first home today than simply buying a different home. This is because the first time home buyer does not have to sell a home first. Additionally there are a lot of incentives available for the first time home buyer.

Finding affordable and quality homes as well as finding the right incentives and programs can be difficult. Many realtors and companies are coming to the rescue of the first time homebuyer to make the process easier. The more these companies can inform the first time home buyer of the options that are available and what they are able to do the more the market will begin to recover and thing will maybe not get any worse. If you have been thinking of buying your first home sometime in the next 5 years this would be the ideal time to take advantage of the programs, incentives and the buyer’s market and buy your first home now.

Stop Waiting? Buy Now!

There are a lot of websites that can help point you in the right direction and answer questions you may have. If you are ready to buy it will probably benefit you to go ahead and buy now rather than wait. There are a lot of buyers that are concerned about the timing and want to time their purchase to the time when prices drop to their lowest point. By then the opportunity to buy a new home may be too late or the competition too high. It is better to look around for the right home, look at the neighborhood and get a feel for the housing market in the area. While doing this continue to build up your funds and your down payment and talk to lenders and real estate agents to help you decide the time to put a bid on a house. Trust the lenders and agents to give you the advice you need when you are ready to buy a home at a price you are comfortable with.

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