I love being a Remax Real Estate Agent. Nothing brings me more joy than helping my first time home buyers find the perfect home, at the perfect price. I always say that when you find your forever home, you will know it. It will just FEEL like home. But though the gasps of excitements, and tears of joy, I realize that many of my clients are more than first time home buyers. Many are first generation home buyers, as well, and being the first person in your family to purchase a home can be pretty overwhelming. I hope that this blog post can help alleviate some of that stress.
Things All First Generation Home Buyers Should Understand
Purchasing A Home Is A Financial Investment
I tell all my buyers that once you decide to buy a home, you should think of it as an investment. Most business minded people agree, that you should always position yourself to receive the greatest return on any investment. So I advise them to study the market, research the different school districts, and to check out different neighborhood associations. It is very important to see if the value of the home you plan to purchase will increase or decrease over the years.
Not All Home Mortgage Loans Require 20% Down Payments
There are many types of home mortgage loans. An FHA loan only requires 3.5% of the purchase price as a down payment. USDA home mortgage loans are 100% financed, and require no down payments. VA home mortgage loans are 100% financed, as well. In addition, lenders may require only 3%-5% percent down on conventional loans. The days of NEEDING 20% of the purchase price, as a down payment, are long gone.
Mortgage Lenders Use Your FICO Score, Not Your Vantage Score, To Determine If You Qualify For A Mortgage Loan
While there is a new Bipartisan Senate Bill being discussed, for the moment home mortgage lenders are still using FICO scores to help determine if a person will qualify for a home mortgage loan. Although your vantgage score may be much higher, your FICO score uses factors, such as income, and current debt, to determine qualification for home mortgage loans. In addition, in order to qualify to purchase a home, mortgage lenders will pull FICO scores from all three major credit bureaus, and use the middle FICO score.
Credit To Debt Ratios and Debt To Income Ratios Also Impact The Amount Of Your Mortgage Loan
Credit Scores are not the only factors that determine if a home buyer will qualify for a mortgage loan. Freddie Mac and Fannie Mae provide guidelines for all USDA, VA, and FHA loans. First, the lender will make sure that the buyer has sufficient income to purchase a home. Next, the lender will access the buyer’s prior financial obligations in order to determine the buyer’s debt to income ratio. The home buyer will need to be able to afford the new mortgage payment, still pay all prior financial obligations, and have a percentage of income left over in order to qualify for purchasing a home.
So many of my first time home buyers are first generation home buyers, as well. Many of my buyers want to purchase a home, and many of them qualify to purchase. However, they are overwhelmed with not knowing where to begin, and they don’t have the benefit of mom and dad’s experiences. I hope that this post has shed some light on a few topics. I also invite you all to contact me with any questions. I would love to schedule a consultation to place you on the path to home ownership!
Let Me Get You Those Keys,