So many buying their first home would come to me looking for options or choices. Why? For some reason or another, something was missing in order to qualify for a home loan.
Thus they needed another choice to fill that gap. Below I will discuss the most common problems in qualifying and give you some work around options.
It is important to know what options are available so you will know exactly what you can get and what you can't.
One of the first things I encourage is to go through the pre-approval process. Perhaps you won't need the options I provide below. By going through the pre-approval process, you find this out.
But it wouldn't hurt you to know the options in case your pre-approval doesn't turn out as well as planned. Below I will discuss the three biggest work around options in the approval process.
When you're moved to buy your first home, you may be shocked to discover how much money you need to have in your savings account for the down payment. Many loan programs require 10 to 20 percent down to qualify for the mortgage.
What does that mean? Well, if you want to buy a starter home for let's say $100,000 then you would need from $10,000 to $20,000 in the savings account for your down payment.
Once one has decided to buy a home, they usually start with picking the home they want and then find out they don't have enough money saved for the down payment. So what can you do?
Don't worry, there are plenty of options for first time buyers to help them with the down payment on their new home. You can qualify for government grant programs. There are also state and local grant programs available.
Some states have awesome first time home buyer options that will allow you to borrow your down payment at a very low interest and it will work like a second mortgage for you. These programs make it possible to have a zero down option. Check out your own state's possibility by going to my grants by state section on the nav bar to the left.
You can also check with your private bank to see whether they have any options available. Sometimes they offer special deals for people just getting their first home.
There are programs out there that will allow gifts for your down payment. That way, if family want to gift you the down payment, they will allow it. Below I have a link to a page that discusses this option if you would like to check it out.
Then there are low down payment programs that may work for you. They make it possible to lower your down payment to 3.5 percent. That means instead of $10,000 to $20,000 saved, you only would need $3,500 for the same $100,000 mortgage. That might be easier to come up with.
Perhaps the company you work for has a 401k program that you and them have been contributing to. You may be able to borrow against your 401k to come up with the down payment.
Of course, you will need a loan program that doesn't mind you using borrowed funds for the down payment. Usually, when it comes from a 401k, they don't mind. They view that like a saving account.
I had a client who did that to buy a house. It worked well for her. She was able to get a very low interest on the monies she borrowed from her 401k and succeeded in getting the mortgage.
As you can see there are several first time home buyer options for the down payment requirement. Now let's take a look at some of the other problems that need work around options.
The next common problem in qualifying for a mortgage is credit. When we are born, we have no credit and while that is not a bad thing, no credit can make things hard when it comes time buy a home. This goes the same for those that have bad credit. No one will want to lend them money to purchase a home due to their poor credit history.
All is not lost though. Let's consider some first time home buyer options for the no credit problem first. There are programs out there that will take alternative credit to qualify you. Now you're probably wondering what is that?
Some programs will use your rent payment history to qualify you. Of course you have to produce a history, so you will need receipts or money orders to provide proof of your timely payments.
Other programs will use your utility bills or phone bills to see your history. Once again you will need to provide proof of these with cancelled checks or money orders. And hopefully, you did pay these on time or even early so they can see a good history!
What about those who have poor credit? This will depend on how poor. There are programs out there that work with those who have a low credit score. You may have to pay a higher interest rate, but it is still possible to qualify for a mortgage.
Unfortunately, if your credit score is too low, the only first time home buyer options available for you is to fix the problems and raise that score! Or see if you can get a co-signer (like a parent) who is willing to put their credit on the line for you.
As you can see, there are first time home buyer options available even for those who have credit issues. Now let's consider the third problem.
As I mentioned above, there are various mortgage programs that will work with you. But finding them is the next challenge.
Most of these programs that are flexible fall under such things as the Federal Housing Authority or FHA where the loan is insured and they do not require certain income requirements. Although, if you have bad credit, you will have to repair your credit first.
If you have credit but it is not so great you may qualify for what is known as Fannie Mae assistance. Another option would be an FHA loan.
Some states have special programs for their residents. You can find them by searching the housing authority website for your state. I have listed a few for each state in the section "Grants by State" on the nav bar to the left. Once you get to that page, navigate down to your state and click on it and you will see what I have listed as available. You will also find a link to your state's housing authority so you can see what else is available.
I find the FHA loan product has the most flexibility and is especially created for you, the first time home purchaser. In order to go with an FHA loan you will need to find lenders that work with these loan products. Sometimes finding a lender willing to work with the FHA loan programs can be a challenge.
There are plenty of first time home buyer options available to help you buy your first home. You will find you can obtain help with just about every aspect of buying a home.
Just imagine you can live the ultimate dream of being a home owner. There are plenty of first time home buyer options to choose from.
Earlier I mentioned down payment gifts as an option. Here is the link to learn more about them.
If you want to see what first time home buyer options are available in your state, click on this link and navigate to your state.
Want to learn more about the FHA loan products? The article FHA Loan Options is awesome in explaining the different programs.
Perhaps you want to understand the different loan products out there. The article Home Buyer Programs explains each different type of loan to help you choose which is best for you.
Would you like to ask some questions about the loan options you are looking at? Have a Question is a cool place to see what others have asked or to ask your own questions. You have an expert right at your fingertips!
Go to House Buyer Solutions Home Page.
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Nov 01, 17 03:23 PM
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