By Tammy Engel
Mortgage Advisor
'Roadblocks to the American Dream'
Mortgage Matters
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The Center for California Real Estate has released a report about “Roadblocks to The American Dream.” In it, they cite current challenges facing home buyers.
Here are their findings: 29% have trouble saving for a down payment. 27% can’t find a home in their desired neighborhood due to limited inventory. 22% can’t get access to credit and funding. 19% hold too much personal debt. 3% are too shy to tell us exactly what their roadblocks are.
We’ve got solutions! For those having trouble saving for a down payment, investigate USDA and VA loans. Qualified buyers can use both programs with no down payment. And, FHA loans only require 3.5% of the purchase price as a down payment – those funds can even be a gift from a family member. For some reason the national media still shouts about 20% down, but these days that really isn’t necessary.
As to not being able to find a home, we can’t really control who is selling their home at any time. You can, as a prudent buyer, have your home loan approval ready to go when your agent does find that special house. Also, you could amend your expectations and allow your Realtor to find something that fits your requirements but might not be something you had considered. All those home renovation reality television shows might be skewing first-time buyers into thinking they need more than is actually necessary to be happy in their new home.
Access to credit and funding? Being a qualified buyer today generally means having a credit score better than 640, with no major adverse credit event in the past three years. A good work history helps, too. Loan programs vary, of course, but you can have a peek at your current credit profile at myFICO.com to see a number that’s closest to what your mortgage advisor will pull.
Holding personal debt may well be a challenge for some. The good news is that at the low end of our market, it can be less expensive to have a mortgage payment than to pay rent. My only caution would be that if you’ve always held lots of debt, even if you somehow pay it off to qualify for a loan, it’s likely to creep back in later. Be smart and calculate how much you can comfortably afford for your mortgage payment, know what price range that is, and stick to your budget when you look at homes.
Maybe the last 3% are just not ready for the responsibility of owning their own home, and that’s a good thing to know about yourself, too. Otherwise, get in the game by contacting your local Mortgage Advisor so you know where you stand.
Tammy Engel is your local Mortgage Advisor, and has been working for your best interest since 1990. Contact her for purchase, refinance, and reverse mortgage at 661/822-7325.
