Seven Tips For Homebuyers
Generally speaking, you’ll need to document a steady employment history, have good credit history, and have a low debt-to-income-ratio to even qualify.
If you fall short in any one area, be prepared to make up for it with a larger down payment or higher interest rates.
Despite the credit crunch and disappearance of zero down and no-doc loan programs, the Federal Housing Administration still offers programs for cash-strapped borrowers with little money for a down payment.
FHA-insured loans require a 3.5 percent down payment, far less than most conventional loans require. They also allow for higher debt ratios and they offer greater flexibility on both the borrower’s credit rating and the source of their down payment (which can include gifts).
Such loans have no income limit, but do come with a maximum loan amount, which ranges from $271,050 in lower cost parts of the country to $729,750 in higher priced markets.
Before signing anything, says Zigas, consumers should research all options available, from adjustable rate loans to points that lower your interest rate, to be sure they’re getting the loan that’s best for them.
Ready, Set Buy
Homebuyers who are in it for the long haul and know their market are almost sure to benefit from a confluence of factors, including low interest rates, better bargaining power and discount prices.
Those who have their financial house in order may want to consider jumping in, says Zigas.
“Trying to bet on the market’s ups and downs is not a reasonable strategy [for home buyers],” he says. “If a house is comfortably within your reach, yeah, it might go down [in price] some more, but if the community is strong it’ll come back and you get to live in the house in the meantime [building equity and benefiting from tax deductions]. If they do their research, then it might be the right time to buy.”