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Help for Hopeful Home Buyers Haunted by Their Financial Past

Mary Ellen Vanaken

Mary Ellen was born and raised in Long Island, New York. After graduating from college, she worked on Wall Street for JP Morgan in New York City...

Mary Ellen was born and raised in Long Island, New York. After graduating from college, she worked on Wall Street for JP Morgan in New York City...

May 3 4 minutes read

The time has come — you think you’re ready to buy your very first home. How exciting! Then you stop and think about your financial past, which is far from perfect. You may be thinking these past mistakes will keep you from your dreams of homeownership, but this doesn’t have to be the case at all. 


With the Mary Ellen Vanaken Team by your side and the following home buying hacks, you’ll be able to save time, stress, and money.

Look into Government Lending Programs

If you have so-so credit and minimal savings, you may think buying a home is next to impossible. However, there are several options available for borrowers with lower credit scores. For example, many people opt for FHA home loans because of the flexible credit requirements and the lower down payment option, though it’s important to keep in mind that private mortgage insurance will be an additional cost for the loan. 


Are you or your spouse a veteran of the US Armed Forces? If so, you may be eligible for a VA home loan, even with less-than-perfect credit. These loans typically come with lower interest rates, have flexible credit requirements, and can be purchased with zero down payment


If you’re not eligible for a VA loan, there may be other lending options you can pursue when you have made mistakes with your credit. For scores that are really low (around 500), an FHA loan may be the best bet. Other federal loan programs include USDA and Fannie Mae.

Be Prepared to Make a Larger Down Payment

When you have less than perfect credit, you may still be able to qualify for a loan. Unfortunately, many of these loans will come with high interest rates that can make managing the monthly payments a challenge. Some lenders may not be willing to offer you a home loan. 


The first step you should take in this sort of scenario is to start working on improving your credit. Per federal law, you are allowed one free copy of your credit report from each of the three main credit bureaus every year. Once you have your reports in hand, look for ways to boost your score. 


Paying your debts down to below 30% can help, but this takes time. If you are ready to buy your home sooner, you can also increase your chances of approval by saving for a down payment. This is an especially practical solution if your income has improved before your credit score.

Make Sure Monthly Expenses are Affordable 


All of the pointers already mentioned can help keep the monthly costs of owning your new home low. When you’re trying to correct mistakes in your financial past, keeping these expenses to a minimum can be so important. These can keep you from repeating the same mistakes in the future. 


In addition to using these savvy tips to keep your mortgage rates low, you should also put careful consideration into figuring out how much home you can afford. Even if a lender will approve you for a higher amount, which can be the case with new VA loans, biting off more than you can chew now will only lead to headaches and financial stress down the road. 


Once you have a number in mind, you may think that your housing choices are limited. If you can speak openly with your real estate agent about your budget, however, they may be able to find affordable listings that still include the features you want


Financial mistakes and imperfect credit can make buying your dream home more difficult, but becoming a homeowner doesn’t have to be impossible. Be willing to learn from your mistakes and then put these practical tips to use in order to boost your chances of securing a home loan. Most importantly, work with a realtor who can provide assurance and guidance along the way. Schedule a call with Mary Ellen Vanaken and her team today. (770) 663-7291.

Article  via Jim Vogel with EldersAction.Org

Picture via pinterest

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