Some first-time homebuyers save up for more than a decade to collect the money that they need to meet mortgage company requirements. Although you only need a 580 credit score to qualify for an FHA loan, the fact of the matter is that lower credit ratings lead to higher mortgage payments. Also, you can only be approved for a home loan when it is clear that you are going to be able to afford realistically priced real estate.
Talk to a realtor, and you will quickly discover that single family homes are difficult to find under the $100,000 mark. In some property markets, small condos can be purchased for around $50,000, but homeowners’ association fees are likely to become part of the equation. If your yearly income is modest, but you want the benefits of homeownership, follow these tips for finding a piece of real estate that already has your name all over it.
Think Twice About Purchasing a Fixer-Upper
Homes that need a lot of TLC can be bought for well under market value, but there’s a catch. For one, homes that need new roofs, come without certificates of occupancy, and cannot be toured or inspected before purchase, don’t usually qualify for traditional home loans. In other words, banks don’t usually want to take a risk on handy special properties even if you know that you will be able to make all necessary repairs. So, instead of looking at shabby homes that are going to need to be totally rehabbed, search for property that is within your budget and ready to move in immediately after closing.
Homeowners Insurance and Property Taxes Get Tacked Onto Mortgages
When considering how much you can afford to pay in monthly mortgage payments, don’t forget that your loan company will probably roll in property taxes and PMI insurance. If less than 20% is put down on your home loan purchase, PMI insurance can raise your mortgage payments by more than $100 a month. Real estate taxes in states such as New Jersey can be nearly as expensive as your home loan payments, so don’t attempt to buy a house unless you have a roomy budget.
Consider Low Maintenance Properties
That cute two bedroom home for sale within a few miles of your job may be within your price range, but how much will it cost to keep your lawn manicured? Buying a new home is a project in and of itself. You’ll need to gain experience making minor interior repairs, learn how to troubleshoot heating and cooling system problems, and become an expert in performing all sorts of odd jobs. What you don’t want to do is purchase a home that has features such as a copper roof or pond that has to be drained regularly. Buy a modest home that needs only minimal maintenance.
You don’t need to earn six figures to be approved for a home loan or work with an experienced realtor. Look at houses that fall into your price bracket and consider future expansions and renovations you can make to your first home. All first-time homebuyers have to start somewhere, so sign a contract on a home that you can grow as you evolve.