Homeownership rates for the under 40 crowd have dropped notably in the past few years. Leading finance experts consider this a result of higher college debt, higher credit card debt, increases in childcare costs, and a lower inventory of starter homes.
The good news is many new loan programs are designed specifically to provide first time home buyers a better opportunity to qualify for financing in spite of the challenges they face.
Here are tips that can help a First Time Home Buyer:
Document the facts about your current financial situation
The quickest way to change from perception to the facts about your finances is to document them. Create a spreadsheet that lists your bank and loan accounts with current balances and interest rates; and list your monthly income and monthly expenses. Now you have facts that will help you prepare to purchase a home.
Cut down on your spending to provide for more saving
Saving money can be a challenge for everyone, and especially for those just starting out. Take the time to analyze your expenses and reduce as much as you possibly can, and you will be surprised at how much extra you save each month.
- Do you need a cable TV plan?
- Consider making your lunch instead of heading to the deli each day.
- Preparing meals at home can really help you save.
- Have you shopped for a lower cost Cell phone service?
- Are you willing to drive an older car so you can eliminate a car payment?
If you save an extra $200 each month that results in $2,400 a year, and in three years you have saved an extra $7,200 toward your down payment.
Improve your Credit Score
Now that you are on the path to boosting your savings account balance, the next key element to work on is your credit score. Many tools are available online and through your bank that provide details about your current credit score and coach you how to improve it. It’s estimated that one in five credit reports have errors on them that cause the score to be lowered. Review your report and take the steps to get any errors corrected. Additional steps to improving your score are: pay your bills on time, pay down your credit card balances, and avoid applying for new credit.
Get a Side Job to add extra to saving
“Gigs” or “Side Hustles”, as they are now commonly referred to, can add thousands of dollars every year to your savings account. Remember above when we suggested you might cancel that expensive cable TV plan? Consider using the extra time earning money to build up your down payment.
Look at homes outside of your favorite neighborhood
Buying your first home is such a wonderful and exciting time. You look at pictures online, go to open houses, and create a list of everything you want it to be including your desired neighborhood. If qualifying for and affording your ideal home in your ideal neighborhood is a challenge, consider looking in other areas that provide the amenities you want for a lower price. For example: if you are planning on a 30 year loan at 4.5% interest, every $10,000 in price increases your payment approximately $50 per month. Choosing a neighborhood where you can get a similar home for $50,000 less will reduce your monthly payment $250, making qualifying easier and providing you $3,000 a year in cash flow.
The team of mobile notaries at Notary Near You truly enjoy supporting First Time Home Buyers as they sign their purchase and loan documents!
Notary Near You is backed by over 20 years of experience and over 200,000 sets of executed documents for lenders, banks, mortgage companies, real estate agents, escrow firms, title companies, and more.
Contact us for all of your notary needs!
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