Home Ownership

How to Overcome Obstacles When Buying Your First Home

home for saleEven though the decision to purchase a home may be noble, it comes with many challenges which may discourage even the most resolute first-time home buyer. Despite the challenges, any home buyer can overcome these obstacles and get the home of their dreams. This article guides first-time home buyers on ways to overcome potential challenges of purchasing their new home.

1. Raising a Down Payment

down paymentOnly the extremely wealthy can buy their homes without requiring any loan facilities. Most people have to take mortgages to buy their first homes. The challenge with this is that you have to put a down payment based on the total price of the property and the amount of loan you intend to take. Down payments show your commitment and can range from 3.5% to 10% of the total sale.

You can overcome down payment problems by budgeting and planning for your home purchase upfront. This may entail saving some money every month for your down payment. Having a clear budget line and narrowing your house hunting process to homes that you can afford can also help to overcome this obstacle.

2. Credit Worthiness

credit scoreIf you intend to purchase your first home with a mortgage, you have to be credit worthy. This necessitates that you get your credit report. It is advisable to get this information from different sources and calculate the average.

The appropriate scores for acquiring credit are 620 for buyers seeking FHA loans and 720 for the normal mortgage loans. You have to work on your credit score way before you begin your house search. This will help you to avoid the disappointment of finding a house without proper financing sources to purchase it.

3. Low Appraisals

Appraisals are compulsory in the US real estate market. They involve a third party review of the property in question to determine the best cost. While there are companies that hire appraisers from the local communities, there are those that send in appraisers from anywhere. This can present a problem if an officer gives the house a low appraisal.

Since appraisals are often ordered by the lenders, you can avoid low appraisals by choosing creditors who have been dealing with mortgages for long and are more familiar with clients in your location. You should also try to negotiate for a good and reasonable price for your house so that the appraisal does not present such a huge difference.

4. Underwriter Report

mortgageOnce you have an appraisal, your creditor will hand over your file to an underwriter who will determine whether or not your loan gets approved. Underwriters can easily find mistakes in your loan application and deny you the chance to own your dream home.

Since underwriters tend to be very keen on details, you are advised to disclose all details that might affect your loan application from the onset. Whether you were married before or you have recovered from bankruptcy, you have to divulge all your personal details in the beginning to avoid any obstacles at the end.

5. Unreasonable Expectations

Apart from all the above obstacles, first-time homebuyers can be irrational about their expectations of their new homes. This can become an obstacle that will lead to an endless home search. It is advisable to be practical and search for a home that is within your budget.

Any home purchasing obstacle can also be overcome if only homebuyers are proactive enough to research and get advice. For any first-time homebuyer, hiring a buyer’s agent is important as these professionals can guide you and advise you regarding every step of homeownership.