According to a new study, it would take the average American 21 years to save for a 20% down payment. 21 years! To put that into perspective, with the current cost of living crisis raging on, an 18-year-old would likely need to save until they are nearly 40 if they earn what is considered an average wage.
The reality is it is much harder to get a mortgage and be able to afford all of the costs associated with a property purchase than it was for the current generation’s parents and grandparents. And for many people, unless they have a windfall or parents who can assist them with the down payment or purchase of property, home ownership might remain forever, just slightly out of reach.
But while it is more difficult, it isn’t impossible, and there are options available for first-time buyers to support them with the cost of buying their first home and ways you can put yourself in a better position to get accepted for a mortgage.
Numerous government grants are available, and it is worth taking your time to look through the options on offer to determine which ones, if any, you are eligible for. Each one will have different requirements and criteria for you to meet; however, it is worth checking every one thoroughly as it can be a generous sum or tax relief should you qualify.
There are Down Payment Assistance Programs that are in place to help you to cover your down payment, closing costs, or mortgage rate reductions and are often available from your state in amounts from $5,000 to $50,000, or you might be able to qualify to make a $25,000 first-time home buyer grant application which isn’t a loan and doesn’t need to be paid back. Still, you do need to meet a specific set of criteria to qualify for this assistance.
Working with a mortgage broker or financial advisor might be an excellent investment to hope you get the correct type of grant to support you in buying your first home.
Low Down Payment Mortgages
While traditionally, you will need to put down around a 20% down payment, as mentioned above, this can be tricky to find, especially in an age where household costs keep rising. However, much like the grant mentioned above, some mortgages offer you the ability to move in with a much lower down payment. In some cases, this down payment can be $0 if you meet the criteria for this type of mortgage. Typically FHA mortgages have a 3.5% down payment, while there are mortgages available for those with a low to moderate income with just a 3% down payment. And you don’t always need to have a perfect credit score with acceptance being offered for a credit score over 540 from certain lenders.
Shop around to look at your options and, like the grants above, find the right leader for your needs and ensure you meet the criteria set out to ensure you raise your chances of being accepted. A mortgage broker can work with you to determine the best loan to apply for and help you to get into the possible position.
Your credit line can be a massive influence on your life, and a low score will impact you in many ways. In fact, a lot of the government assistance for help getting on the property ladder is dependent on a good or average credit score. And this is something you and your aliens can directly influence.
You need to ensure you are spending wisely and not taking on too much of what is considered bad credit. This Is the like of store cards or credit cards and spending them to the max. Making minimum payments might keep you afloat, but this won’t work in your favor when it comes to your mortgage application. Wells Fargo suggests keeping your debt level to under 35%, including any mortgage you are taking on too. This figure means you still have money left over from your wages and aren’t spending everything on debt and bill payments. It will also ensure you are working to support your credit score, which needs to be over 740, for more favorable rates and increased acceptance offers.
Preparing your finances and finding the right mortgage as a first-time buyer can be a daunting experience; however, by not rushing the process and knowing what options are available, you can find the proper support to help you purchase your first home without overextending yourself financially.