Home Buying for the Young
in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County.
With the housing market in its current dismal state, a lot of people are wondering if they will ever be able to own a home. This can be especially true for young adults who are just entering the workforce and hoping to secure a home loan in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County.
Young adults, especially those who have attended Appalachian State University or other higher education institutions, are faced with a compound problem. Virtually all of these individuals are carrying student loan obligations as they come out of college. For many young adults, the amounts of these loans can be substantial. Now, with home mortgage credit standards being raised these same young adults are facing issues with higher down payment requirements for home loans, higher credit worthiness standards, higher credit scores needed to get home loans, and the general, albeit, silent, reluctance of some lenders to offer such high value loans to younger people.
But there is still hope. In order for a younger person to get a home loan with as little pain as possible, a few things should be kept in mind.
One of the reasons so many people bought homes during the last few years was the "no down payment" needed option. On the surface, this may look like a great deal but it has many drawbacks. First of all, buying a home with no down payment is going to be harder because most lenders will be stopping this practice or curtailing it sharply. Second, no down payment options guarantee that the loan will take much longer to pay off and if you are in an adjustable rate mortgage program that longer period of time can result in much higher payments later on as the rates reset and reset again.
For younger adults who want to buy a home saving up for a down payment is one of the most important steps to be taken. Having a down payment will show the lender that you are serious about owning a home and it will go a long way in helping you secure your loan.
If your current student loan payments are at a level where it makes it difficult to save for a down payment, then you are probably being too impatient for your new home. In other words, if your current bills are zapping your monthly income, adding a house payment (and all that goes along with that) will only make matters worse.
One great way to save for a down payment is to formulate a percentage of your earnings (say 3 percent each pay period) and have that amount automatically forwarded into a savings account. The more cash you can save each pay period the faster you will accumulate the funds you need for the down payment. Most people can save enough within five years to make a substantial down payment.
If you already have the ability to make a down payment and you feel confident that you can make the required mortgage payments, the next step to ownership is to find a reasonable loan rate.
Many people do not realize that mortgage rates that lenders offer are determined by the consumer's credit score. Those with higher scores get the better rates. Conversely, those with lower scores get the higher rates.
As a young adult just coming into the workforce and into the credit market, it is imperative that you begin your credit history on a positive note. This is not difficult to do if you keep a few things in mind.
Always pay your credit card bills and other obligations on time. Being late even a few times can damage your credit score.
Limit the amount of credit cards or other debt that have. The best advice is to maintain one or two credit cards and no more than that for now. Remember that your student loans are also a part of your credit record and they, too, count towards the total amount of debt you are carrying. The old advice to open many lines of credit and then close those lines is no longer applicable. Doing that old trick today can hurt your credit score and cause the lender to deny your loan.
Make sure you check your credit reports. There are three of them that you need to look at. You are allowed, by law, to order one copy of your credit report per year from each of the major credit reporting agencies. You can do this online.
When you get your reports read them carefully and check for any mistakes. If you find mistakes, follow the instructions on how to have them corrected.
Lastly, before signing for a home loan, make sure you can make the payments. A fixed rate loan will tell you exactly how much your monthly payments will be. If you are entering into an adjustable rate mortgage make sure you understand the payment schedule and how much the payments will increase when the rates reset.
If you have question about this article or about real estate in either in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County, please give one of our professional Realtors a call today.
Ace Realty in Blowing Rock can help you with all your Blowing Rock area real estate needs. We can be reached at (828) 295-6165.