First Time Home Buyer

If you’re in your 20s and thinking about buying a house, it’s easy to understand how you could be confused and overwhelmed. According to a study by the National Association of Realtors, people under 35 with student loans are postponing home buying by an average of 8 years. But buying a home while in your 20s is not only a possibility, you’ve got a lot of resources that could make it happen for you. First, we’d like to dispel a few myths about home buying that could have been keeping you out of the home market.

Student loans will prevent you from buying a home

The problem of student loan debt is finally on the national agenda, and lawmakers are seriously discussing reducing the interest on student loans or even forgiving some or all student loan debt. Although this plan is still under discussion, some homebuilders and the majority of states offer home buying assistance programs for people whose student loan debt is preventing them from buying a home.

California offers the CalHFA “My Home” first time homebuyer assistance program which provides down payment and closing cost assistance. CalHFA also works with counties to offer tax credits to make mortgage payments more affordable for first-time homebuyers. A first-time homebuyer is anyone who has not purchased a home during the past three years. So, even if you’ve bought and sold a home before, you could be eligible for one of these programs as long as it hasn’t been during the past three years.

Work on your credit score

These days, you can sign up to monitor your credit score via dozens of apps and financial programs. The majority of credit cards and financial institutions offer free or very low cost credit score monitoring. Learn how your credit score works and work to increase it. Your debt-to-income ratio and credit use ratio will affect your credit score, along with any late payments.

You’ll want to increase your credit score as much as possible: ideally to 660 or better. However, some mortgage programs, including FHA home mortgages, can offer loans to people with credit scores as low as 580.

Work with a knowledgeable realtor and mortgage broker

Everyone is online and connected, and you can shop for homes using your mobile device — even apply for a mortgage. But many home loan programs still work through mortgage brokers. And, not every home for sale is a featured listing on an online home search service. The personal touch still matters — it might matter more than ever these days. You can learn what your alternatives in home buying really are by working with a mortgage and home buying professional.

Sources

https://www.usnews.com/education/blogs/student-loan-ranger/articles/2017-10-11/new-homebuyer-programs-help-student-loan-borrowers

https://www.realtor.com/advice/buy/how-to-buy-a-house-in-your-20s/

One of the three big credit bureaus, TransUnion, predicts that there will be 8.3 to 9.2 million first-time home buyers between 2020 and 2022. This is almost 50% more new home buyers than 2015, and 25% more than 2017.

Where is the trend coming from? First, unemployment is low. More people have the opportunity to save money for down payments, and home prices aren’t rising quite as fast as they have been in recent years. Home loan interest rates, including on 30-year and 15-year fixed rate conventional, FHA, and VA mortgages, continue to be at low levels.

What do first time home buyers want in their first home?

The traditional view of a “starter home” leading to starting a family, then moving up the home-buying ladder isn’t as common as it used to be. Today’s first time home buyers are more interested in using home ownership as a wealth-building tool. They primarily see home ownership as a good financial alternative to paying rent. Some first-time home buyers may still be living with family or may be sharing housing. In this case, privacy and a place to call their own are the primary motivators.

What has delayed first time home buyers so far?

Student loan debt continues to be a challenge for many potential first time home buyers. Some buyers are waiting to get a better job or advance in their careers before making the move to buy a house. And still other first time home buyers aren’t aware of the variety of home loan options that are available to them.

Two thirds of the potential first time home buyers surveyed by TransUnion in 2019 said they hadn’t heard of either Fannie Mae or Freddie Mac, the two government-sponsored home mortgage enterprises that buy the majority of conventional mortgages issued by banks or other lenders. And a large number of first time home buyers still think they need perfect credit, a high income, and a 20% down payment to even consider buying a house.

If you’ve been thinking about buying a home for the first time, you’ll benefit from the help of an experienced home mortgage professional. California Platinum Loans can tell you what your options are and guide you through the process. You can join the new first time home buyers in taking advantage of good home buying conditions and low mortgage interest rates in 2020.

Sources

https://themortgagereports.com/57571/2020-will-be-a-big-year-for-first-time-homebuyers-analysis-shows