Homeownership is More Attainable Than You Think
Homebuying has long been a part of the “American Dream.” But it doesn’t have to just be a dream. We know the homebuying process can feel overwhelming- or maybe even near impossible- but buying your first home is more attainable than you might think! Let’s talk about some perceived hurdles hopeful homebuyers face and why they shouldn’t stop you from fulfilling your dream of homeownership.
Lack of awareness around down payment options is one of the biggest roadblocks for many looking to buy a home. Many hopeful homebuyers feel they need to have tons of money in the bank to afford a down payment. Saving 20 percent of a home’s price for a down payment can feel daunting and can take years. But it’s also not necessary! The truth is, there are many programs that allow for less than 20 percent—some even allow zero percent down! Important to note: When you put less than 20 percent down, you are required to pay for mortgage insurance until you work your way up to having 20 percent equity.
Home Loan Options to Meet Your Needs
Home loans are not one-size-fits all, meaning if you’re worried you won’t qualify for a traditional mortgage, there is likely a home loan option out there that will make homebuying more attainable for you! For instance, many first-time homebuyers find that an FHA Loan is a good choice for them, as it requires only a 3.5 percent down payment as well as flexible qualifying criteria and lower credit score requirements. Loans such as USDA Loans for homes in rural areas or VA Loans for veterans require zero down payment and less stringent qualifying criteria, should you meet the qualifications. You have home loan options!
Less Than Stellar Credit
If your credit score is less than ideal, you may think you’re out of luck when it comes to buying a home. Another myth! While it’s true your credit score is one of the primary metrics used to determine if you qualify for a mortgage, (and what your loan terms may look like once you do) a low credit score does not mean you can’t be a homeowner. Only 1% of Americans have a perfect credit score, but 62.9% own a home. A low credit score with an “acceptable” credit history may get you approved. Additionally, credit scores can be improved within 2-weeks or over a period of a few months. And don’t forget that certain loan types, as mentioned above, will allow lower credit score requirements.
If you are worried that your credit may need some work, our Home Buyer Solutions Group can help you get there. Our team of professional Credit Specialists will provide the guidance you need to improve your scores and successfully prequalify for a mortgage - all at no cost to you.
Debt vs. Debt-to-Income
Buried in debt? The average American now has about $38,000 in personal debt, excluding home mortgages, so you’re far from alone. But that doesn’t have to stop you from buying a home either! Though your debt might feel high, it’s your debt-to-income (DTI) ratio you should really be paying attention to. A debt-to-income ratio is calculated by dividing your monthly debt payments by your monthly gross income. This ratio is expressed as a percentage, and lenders use it to determine how well you manage monthly debts and whether you can afford to repay a loan. So instead of panicking over the amount of debt you may have, look at your debt-to-income ratio as you may be in a better position than you think to buy a home.
Don’t give up on your dream of homeownership because it feels too difficult. Chances are, owning a home is likely more attainable than you think! And Lennar Mortgage is here to be your partner in the homebuying process.