Buying a new home can be exciting but intimidating at the same time as a lot of things need to be considered. A survey conducted by real estate listing service Trulia, revealed that around 59 percent of renters aspired to own a home but something or the other prevented them from doing so.
Below is a rundown of the most common things that prevent prospective homeowners from owning a home.
1. Not Enough Money for a Down Payment
One of the biggest obstacles for prospective homeowners is the lack of money. Purchasing a new home requires a large amount for a down payment. However it is possible to get a home for as little as 3.5 percent down with an FHA loan. So even if you don’t have a ton of assets you can still buy your dream home. It is even possible to buy a home with no money or down options in some rural parts of the US.
2. Inability to Get a Mortgage Loan
Inability to qualify for the mortgage loan is another major barrier. In order to make yourself eligible for a mortgage loan, it is advised to get your income, assets and employment information together before you apply for a loan. Holding a steady job for two years or longer, assets seasoning and being preapproved will allow you to obtain a mortgage loan.
3. Bad Credit Score
A good credit score allows you to qualify for a mortgage loan at the lowest interest rates. On the other hand, with a bad credit score, your mortgage rate alone might disqualify you for financing. There are various mortgage loan options available for those with bad credit scores. However, you will be more comfortable if you apply for a mortgage with a good credit score. It will not only help you to easily qualify for a mortgage but will also save you thousands of dollars in interest over the years.
4. Existing Debt
The biggest roadblock for prospective homeowners is debt. Having tons of credit card debt will create trouble for you when you apply for mortgage. Mortgage lenders usually check your debt-to-income ratio in order to determine how large a housing payment you can afford. The more existing debt you have, the less you will be able to borrow for your mortgage. So, it is recommended that you pay down all your existing debt before applying for a mortgage loan. Doing this will also help you build your credit profile.
5. Unstable Employment History
A stable job is critical for qualifying for mortgage as it gives your mortgage lender the surety that you will be able to keep making your mortgage payments. It is not a good idea to buy a home without good employment history. After all, you don’t want a foreclosure on your record.
6. Fear of Falling Home Prices
There is always an issue of falling home prices. It can be pretty daunting to see your investment plunge in value. Mortgage rates are definitely at their lowest in history which on the one hand makes it attractive for prospective homebuyers to get a mortgage loan. But the fact that interest rates are expected to remain low for a fair period of time can be a source of worry for many.
These are the most common things that prevent people from owning a home. Which one are you most worried about, and what do you plan to do about them? Share your thoughts and fears with us below.
