In my 35 years as a mortgage originator and exclusive buyer’s representative, many prospective homebuyers have told me they are delaying their purchase because of money or their credit history. In some cases, delaying a purchase is necessary and prudent. However, in many cases the delay is unnecessary and will result in getting a higher mortgage payment, a less desirable home or being priced out of the market.
There are a number of financing options available to help you buy a home sooner than you thought possible.
Delaying your purchase will likely result in paying more for the home you eventually buy. Right now, rates are at historic lows, and all the experts expect rates to rise later this year or next. A 1 percent increase in mortgage rates on a $300,000 mortgage increases your payment by $180; if property values increase by 10 percent, your payment will increase an additional $161 a month, resulting in a total increase of $341. If you can afford the higher payment, it will cost you considerably more to own the home you want; if you can’t afford the higher payment, you will end up with a less-desirable home and/or a longer commute.
Even with a low credit score, there are a number of financing programs available to homebuyers. Some Federal Housing Administration and Veterans Administration lenders will accept a score of 580 and finance borrowers without traditional credit by verifying their rental payment history and utility payments. U.S. Department of Agriculture financing is available to buyers with scores of 600 or higher; conventional financing generally requires a score over 640.
Lenders can offer a number of financing programs to help buyers who may not have enough cash to make a 20 percent down payment.
VA and USDA programs do not require any down payments. The FHA offers loans with a 3.5 percent downpayment, and the first-time homebuyer conventional program has a 3 percent down-payment requirement. The local Regional Housing Alliance has many programs to get buyers into homes for less than a 3 percent investment. In all cases, you can get a gift for any required down payment, and the seller or lender can pay 100 percent of your closing costs.
If homeownership is your goal, waiting can be costly. Many lending guidelines have been loosened, so even if you were told that your scores were too low or you didn’t have sufficient funds in the past, you should consult with a competent buyer’s agent and mortgage originator who has access to a number of lenders and programs. You may be pleasantly surprised.
Steve Setka is an exclusive buyer’s agent with Keller Williams Realty in Durango and a licensed mortgage originator. He can be reached at 903-7782 or firstname.lastname@example.org.