Top 3 Challenges of First-Time Homebuyers

Top 3 Challenges of First-Time Homebuyers

Buying your first home is a huge decision.

It’s a frightening financial commitment.

The first thing to do is decide if buying makes more sense to you than renting.

Ask yourself the following questions:

  1. What can you afford and how much savings do you have?
  2. How long do you plan to stay in the home?
  3. Do you want stability or flexibility to move around?
  4. Do you want to be responsible for repairs/maintenance?
  5. What are your financial, career and family goals?

Realtors, in general, will tell you it is much better to own property than to rent. And, for the most part, that is true. But, you must think about what works for YOU, your situation, and your loved ones.

Some reasons why you might want to rent:

  • You want flexibility and are not sure you want to settle down in one place due to work, school, or family circumstances.
  • You don’t have much money for a down payment or for the cost of your own repairs (normally a landlord handles repairs in a rental).
  • Your finances are irregular and unpredictable, which might make mortgage payments difficult.

Some reasons why you should buy a home:

  • You plan to stay in the same area for a while.
  • You are willing to rent the home out as income property if needed.
  • You qualify for a prime-rate mortgage and feel comfortable with the monthly payments.
  • You are ok with putting some work into a fixer-upper which could increase the value of your investment.

Although most people who want to start building equity and more stability in their lives lean towards buying a home, first time home buyers who are unprepared can run into a few problems.

  1. The Down Payment – Some first-time homebuyers don’t realize that they will need 10-20% to put down for a conventional loan. For a $200K house that’s $20-40,000. There are FHA and USDA options that could be a better option. An FHA loan only requires 3.5%, which is $7000 on a $200K home. There are also other attorney’s fees and closing costs. These numbers sometimes get in the way of first-time homebuyers moving forward in buying a home. The bottom line: start saving.
  2. Credit Scores – When first-time homebuyers go speak to a lender (the first thing you should do in the home buying process!), one of the main things the lender looks at is their 3-digit credit scores. These scores show how well the potential homebuyers handle their overall finances. Most conventional lenders are looking for a score of 620 or higher. If you find that your score is lower than that, don’t fret. Your lender should be able to tell you which areas to work on and work towards so that buying a home becomes a reality.
  3. Employment History – Mortgage lenders prefer to give a loan to people who have worked at the same place for at least 2 years. Many first time homebuyers are still building their careers and may be in transition. As long as you have a solid source of income, some lenders will overlook job changes.

If you are a first-time homebuyer and any of the above points are a challenge for you…

That’s ok!

Find out where you stand. Create a game plan and begin to chip away at the things you need to do to make buying a home and owning a home a reality for you.

You’ll be surprised how quickly you can accomplish this!

Need help with your next step in buying a home?

Call 843-424-0995 or email for help.