First-time Home Buyers More Optimistic A nationwide shortage of housing inventory has been pushing prices ever
Jul 9 2017 38250 2
TOP 3 WORST ADVICE FOR BUYING A HOME
THINKING OF BUYING A HOME? There's so much information out there, you could easily suffer from information overload. On the other hand, it's good to know you have countless resources at your fingertips. With that comes a word of advice, there’s also some not so great advice out there that can make you feel like throwing in the towel.
Here’s some home buying advice you can bypass:
1. You must have perfect credit.
Good credit is, well, good. The better your credit, the better rate you’ll get. However, you can still get an FHA loan with just 3.5% down. Many loans with down payment assistance programs have minimum credit scores of around 640. Shop mortgage lenders they can help you find out what your real options are today, then decide if you want to jump in or if you still have some work to do. You can also check out CreditSmart, Freddie Mac’s signature programs of 12 modules and a curriculum designed to help consumers understand, build and maintain better credit.
2. Rent until you have 20% down.
Many articles still assume 20% down is best. Yes, it will help you avoid paying private mortgage insurance (PMI), but it may be worth it to pay the PMI now and buy sooner. Consider this: when your rent increases each year (not to mention those student loans), it makes it more difficult to save for that 20% payment keeping you perpetually sidelined. Waiting & renting until you have 20% down can put you behind the eight ball as prices and interest rates continue to rise.
3. Living Debt Free
Living debt free sounds good but in a society driven by credit it can hurt you. Credit is essential in developing a history of just how reliable you are as a borrower. Without credit, lenders will consider you far too risky. Living without some type of revolving credit could place you in the unenviable position of paying higher mortgage interest rates & fees. Better to maintain your revolving credit between 30-35% of your total debt to income ratio. Establishing a consistent and reliable payment history will boost your credit rating in all three rating companies and define you as a credit worthy consumer giving you access to better lending programs and lower interest rates & fees.
Buying a home can be overwhelming with today’s information overload. Do your research, but don’t give up. Keep investigating what’s right for your personal situation. Every homebuyer is different.
Josh Murray is an Associate Broker and Team Leader at Keller Williams- Top Michigan Realty Group, a firm that specializes in all aspects of Residential Real Estate in Metro Detroit. Josh Murray receiv....
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