The feeling of satisfaction is always higher while purchasing a home. However, purchasing a home is a big financial decision and requires lots of prerequisites to afford a home. Especially when you are a first-time homebuyer, you have to face lots of challenges to own a home. Here we are presenting some challenges along with potential solutions that first-time homebuyers should know.
The most common challenge is paying the down payment. Because you have to pay 20% of the home’s price as a down payment when dealing with a traditional mortgage. Meeting the requirement of paying this large amount of down payment is quite challenging for maximum first-time home buyers.
However, now some mortgage options can help first-time buyers to choose a low-down-payment option. Even some lenders offer no-down-payment loans. The borrower has to pay only 3.5% of the purchase price as a down payment with an FHA loan. But borrowers have to pay a Private Mortgage Insurance (PMI) premium which protects the lenders in case the borrower defaults on the loan.
The home-buying process can be quite challenging for first-time buyers. In most cases, first-time buyers fail to find a suitable property in their price range. Even though they get limited property to choose from, they often face difficulties of not having sufficient credit history or having a bad credit history. Lenders always prefer borrowers with a good, established credit history. As they are less risky, they can enjoy a lower mortgage rate. A good credit record also helps the borrowers to get approved for a mortgage. As most first-time buyers don’t have enough credit history, there is a chance of declination of their loan application.
But there are plenty of ways to bring things into shape. You can easily take a secured credit card and make on-time payments. It will help you to build a good credit history. If you have a bad credit score, reduce your credit card balances and make your payments on time. It will repair your bad credit score. It is always wise to start the journey to homeownership on the right foot. Now you can find some options that provide loans even if your credit is less-than-perfect. They will help you to find the home loan that’s right for you.