Buying a home as a single homebuyer presents unique challenges. However, with the real estate market moving quickly, many renters are seriously considering buying a home to help stabilize housing costs as rents continue to rise. If you are a single home buyer, here are seven tips to help you with the home buying process.
Single homebuyers should keep their options open when searching for the best loan for them. For example, if you are a first-time homebuyer, an FHA (Federal Housing Authority) or VA (Veterans) loan may be a great option with their low down payments. Other loan programs are great for more rural areas (USDA) and other federal programs like Fannie or Freddie Mac.
Moreover please make sure you consult with an experienced lender (DRMC is here for you), as depending on your financial profile, there may be special programs geared to encourage or provide assistance with down payment or general guidance.
One of the biggest concerns of single home buyers is their credit score. Your credit score is a combination of outstanding debt, the timeliness of paying debt, length of credit history, new credit and mix of credit. If you are a young home buyer or someone with a lot of student loans, you may not have had the time to establish a high credit score. However, FHA loans, VA loans and other programs are available for newer borrowers and can be used. Let us help you determine which path might best suit you.
If you find that your credit is not where you would like it to be, you can take steps to repair your credit. If you are carrying a large balance on a credit card, take steps to pay it down and eventually get the balance down to zero. Pay any late or outstanding bills. Increasing your credit limits, while paying down your balance, creates a lower debt to income ratio.
Lenders like to see that homebuyers are not only employed but do not have a history of job hopping. This shows lenders that you are not at risk of missing payments.
Lenders like to see that you not only have a down payment but money in the bank beyond the down payment. This shows lenders that you are prepared for any emergency that comes your way.
If you find that your income alone makes a home purchase difficult, consider turning to a family member. Remember that not only will their credit history, income, debts and assets affect your loan application and purchasing power, but they will also be financially responsible.
Going through the pre-approval process before you start your home search serves a few purposes. First, it tells you how much home you can afford. Second, it signals to sellers you are serious and ready to go when you make an offer.
While single homebuyers face unique hurdles, they are not insurmountable. By consulting a mortgage lender, single home buyers can develop a plan for finding the best mortgage rate available. Diamond Residential Mortgage looks forward to working with you to help you purchase your new home, contact us for more information.