Home ownership is still on the rise and has become one of the top goals of many first time home buyers across the country.
Unfortunately, first time home buyers are still finding it difficult to purchase the home of their dreams.
Even though interest rates are still considerably low, many first time home buyers are having trouble purchasing a home that they can call their own.
First Time Home Buyers Should Avoid These 5 Obstacles
- Not Getting Pre Approval
- Putting Off Student Loans & Credit Issues
- Not Knowing How Much House You Can Afford
- Limiting Your Search For Only One Lender
- Failing to Find a Great Buyer’s Agent
First Time Home Buyers Obstacle #1
Not Getting Pre Approval
The main reason to get pre approved for a mortgage is the avoid some common obstacles when purchasing a home.
Many first time home buyers will start searching for homes and then find a home that they absolutely fall in love with but are not able to get approved to cover the cost to purchase the home.
Needless to say, this is heartbreaking for any first time home buyer.
Having a pre approval letter is basically stating that “you” as the first time home buyer has proof in writing that you can actually afford the selling price of the home.
This will also help show that you mean business and are a serious about purchasing a home.
First Time Home Buyers Obstacle #2
Pay Off Student Loans & Resolve Credit Issues
One of the biggest obstacles many first time home buyers face when purchasing a home is trying to get preapproved for a mortgage but outstanding student loans are keeping them from getting approved.
I have worked with many first time home buyers and even though they are generating enough income to purchase a home, the student loans are still preventing them becoming home owners.
Try to pay off as much debt if possible in order to lower your Debt to Income ratio (DTI). This will not only improve the chances to get approved for a mortgage but it could also help with getting a lower interest rate. Calculate your DTI Here
“DTI Ratio” Explained
A debt-to-income, or DTI, ratio is derived by dividing your monthly debt payments by your monthly gross income. The ratio is expressed as a percentage, and lenders use it to determine how well you manage monthly debts — and if you can afford to repay a loan.
First Time Home Buyers Obstacle #3
Not Knowing How Much House You Can Actually Afford
Searching for a dream home is an amazing experience. Unfortunately, not knowing how much home you can actually afford could keep home buyers from finding the home of their dreams.
One tip is to make sure that as a first time home buyer, your housing expenses don’t go over 30% of your annual income.
This would include HOA fees, property taxes, and home owners insurance.
For example, here is a quick way to get an idea of how much house you can actually afford comfortably.
Lets say your monthly income is $4,000. Multiply that monthly income by 30% to get an estimate of how much you can afford on housing expenses. $4,000 X 30% = $1,200.
Owning a home is a great investment and it is key to plan your mortgage payments ahead of time. Calculate your monthly mortgage using our free calculator below.
DISCLAIMER: The information found in these calculators are to be used as a guide and is deemed reliable but not guaranteed. Please schedule an appointment today to find out more information about your loan.
Every first time home buyers monthly income will be unique but using this equation will help give you a base number to help determine how much you should be spending on housing.
First Time Home Buyers Obstacle #4
Limiting Your Search to Only One Lender
Sometimes first time home buyers will be so excited that they finally get approved for a loan that they don’t take that extra step to search more lenders.
Many first time home buyers leave a lot of money on the table because there could be other lenders that can get you an even better deal.
My advice would be to shop around for at least 3 other possible lenders.
Here are some of the main reasons why:
- Compare Rates Being Offered
- Compare Lender Fees
- Compare Loan Terms
- Response Time of Lender (Communication)
- Excels at Customer Service
Needless to say, find a lender that is responsive and one that you can trust.
First Time Home Buyers Obstacle #5
Failing to Find a Great Buyers Agent
For example, having a great real estate experience starts with a great real estate professional.
Find a real estate professional that you feel comfortable with and that you can connect with on a personal level.
Honestly, you will realize if he or she is the right one for you within the first 10 minutes of meeting the real estate professional.
6 Things To Look For in a Real Estate Professional
- A+ Communication Skills
- Prioritizes Your Needs Above Everything Else
- Knowledge of the Neighborhoods
- Excellent Negotiation Skills
Communication and responsiveness is extremely important when searching for a real estate professional to work with.
Ask family and friends if they could refer you to some real estate professionals that they had a great real estate experience with.
Please keep this in mind. If you don’t connect personally with the real estate professional you wont connect professionally as well.
This could lead to mis-communication and often times cause first time home buyers to have a negative real estate experience.
Home ownership is one of the most amazing experiences one can have.
As a result, going through the home buying process as a first time home buyer can be an intimidating process.
Don’t let this prevent you from finding your dream home.
If you or someone you know is a first time home buyer and would like some guidance through the home buying process please feel free to reach out to me below.
Until then, Happy House Hunting!