Latest news with #firsttimehomebuyer
Yahoo
4 days ago
- Business
- Yahoo
How to improve your finances before your first mortgage
Key takeaways Improving your finances before applying for a mortgage gives you the best shot at getting good terms. In evaluating your creditworthiness, lenders consider your credit score, income and other assets, debts, the amount of your debts in relation to your income, and your employment history. Improving your credit score, reducing your debt load and ramping up your savings can boost your financial profile. Shop Top Mortgage Rates Your Path to Homeownership A quicker path to financial freedom Personalized rates in minutes As a first-time homebuyer, you might not have a substantial income or savings to work with. That doesn't mean you won't qualify for a mortgage, however. There are many ways you can prepare your finances to be a more competitive mortgage applicant. Here are three ways to get your finances in shape before submitting a mortgage application. What financial elements are considered in the mortgage process? How do you know you're really ready for a mortgage? There are some signs that might point to yes, according to Freddie Mac. These include: Your credit score: One of the biggest determining factors for mortgage approval is credit score. A credit score of 661 or higher places you in the creditworthy category, according to Freddie Mac. If your score is between 600 and 660, you could be close to being ready for a mortgage but not quite there yet. If your score is 599 or lower, you're likely not ready to take on the additional debt. Your debt-to-income (DTI) ratio: DTI is also significant, and there are two measures. The front-end ratio, which compares your projected monthly mortgage obligation to your monthly income, should be, ideally, 25 percent or less. The back-end ratio — your overall debt, including auto loans and student loans, can be higher, but most lenders like it to be no more than 36 percent, with 43 percent as the max. No bankruptcies/foreclosures: Your credit profile should be free of these blemishes for at least seven years. Timely debt payments: Your credit report should also be free of debt payments that are 90 days or more overdue. Bankrate's take: This isn't to say you won't get approved for a mortgage if you have a lower credit score or don't meet all of the other criteria — you just might be stretching yourself too thin or unable to achieve other financial goals. How to improve your finances before getting a mortgage When you apply for a home loan, the mortgage lender reviews all aspects of your credit and financial profile to assess your risk as a borrower. This includes your credit history and score, employment history, income, debt and savings or other assets. The strength of these factors helps the lender decide whether to approve or deny you for a loan and for how much. Below are three tips to boost your chances of getting approved for the amount you want. 1. Check your credit Well before you apply for a mortgage, it's a good idea to review your credit reports and scores to ensure all information is up-to-date and accurate. You can obtain your credit reports (which don't include your scores) for free once a year from each of the three credit bureaus (Equifax, Experian and TransUnion) through When reviewing your report, keep an eye out for any errors that may be dragging your score down, such as inaccurate reports of late payments or balances that remain on your report that you've already repaid. To correct the error, submit a dispute to the credit bureau. Taking the time to ensure your credit report is accurate can help improve your score. 'You can't fix what you don't know about and the earlier you identify issues, the more time you have to resolve them,' says Brian Vieaux, president of FinLocker, a fintech company that helps consumers prepare their finances for a mortgage application. 'Checking your credit helps you identify surprises, collections, high utilization or errors that can be fixed in advance. Even a 20-point bump in your score could save thousands over the life of your loan.' When you apply for a mortgage, lenders may look at your scores from each credit bureau and base a decision on the middle number. For most mortgages, you'll need a minimum credit score of 620, although some loans allow for as low as 500 or 580 if you have other 'compensating factors,' such as substantial savings. The best interest rates and terms go to borrowers with scores of 740 or higher. 2. Work on your debt To improve your credit score, strive to pay all your bills on time. Nothing dings your score like late payments. If you're having trouble making payments, now's the time to contact creditors or service providers to arrange a payment plan or other form of relief. Along with maintaining a history of on-time payments, start chipping away at any outstanding balances. There are many ways to tackle them, including: Debt avalanche strategy Debt snowball strategy Debt consolidation options Aside from the positive impact on your credit score, less debt lowers your DTI ratio. Lenders take this into account when determining how much to approve you for. It depends on the loan program, but most lenders look for a DTI ratio of no more than 45 percent, although some are stricter and cap it at 36 percent. Others are more flexible, and will allow up to 50 percent. You can use this DTI ratio calculator to get a sense of where you stand. 'Your debt-to-income plays a major role in shaping your mortgage application, impacting how much lenders might be willing to lend,' says Felton Ellington, vice president and community lending manager for Chase Home Lending. 'If a large chunk of your income goes toward paying down debt, that means your DTI is high. Lenders typically want to see that your DTI is low, as it tells them you'll be able to manage your monthly payments with minimal issues.' Lastly, avoid taking on any new loans. This will add to your debt load, which increases your DTI ratio and can potentially dent your score. This is especially so if your credit utilization is already high or you can't handle the additional payments. 3. Get serious about savings Unless you qualify for a no-down payment mortgage, you'll need to be ready with considerable upfront cash. Here are some things to save for: Savings for a down payment – As of April 2025 , the median down payment on a home was $56,100, according to ATTOM Data Solutions, an analyst of property and real estate data. The good news is that you can get away with putting down as little as 3 percent for a conventional mortgage. Closing costs – The amount of closing costs depends on where you're buying, but they generally range from two to five percent of the purchase price. Nationally, the average closing costs were $6,905 in 2021, the latest year for which figures were available. Moving costs – Be sure to budget for moving costs as well, especially if you plan to hire a moving company. General reserves – It's a good idea to set aside a portion of money to pay for costs like furniture or home repairs. An emergency fund – This should equal about three to six months of your living expenses. 9% The percentage of a home purchase price that first-time buyers typically make as a down payment. Source: National Association of Realtors Even if you don't know your homebuying budget or how much house you can afford yet, start saving now. Here are some strategies: Put funds earmarked toward the home purchase in a high-yield savings account. Avoid or cut back on eating out and other discretionary expenses. Cancel unnecessary memberships, services or subscriptions. Sell items you no longer need or want, such as clothing or furniture. You can also accelerate savings in other ways as well.'One of the best things you can do to save for a home is make practice payments,' says Mason Whitehead, a home loan specialist with Churchill Mortgage. 'If you are paying $1,500 for rent and you think you can afford a $2,500 mortgage payment, start living that way now and put the extra $1,000 — in this scenario — into savings and live like you had that obligation now.' What if I can't improve my finances? Due to income, you might be limited in how much you can put toward debt or savings. That's OK — this could simply mean you need to wait to become a homeowner or need more time to get established in a career and build your earnings. In the meantime, do everything possible to maintain your credit score. If you can't afford or don't qualify for a mortgage now, with good financial habits, you'll be able to in the future. FAQs How much money should you have before buying a house? The amount of money you should have before buying a home depends on your budget (your income, your other obligations), how much home you'd like to buy and the amount of cash you can afford to pay upfront. When buying a home, you need to have enough money for a down payment and closing costs. It's also important to have money for moving costs and enough savings as a cushion for emergencies. Is $50,000 enough to buy a house? Not outright, certainly, but it's about enough to cover a down payment. The median sale price of a home in May 2025 was $422,800, according to the National Association of Realtors, and the average down payment is 15 percent as of 2025. A 15 percent down payment on the median-priced home would amount to $63,420. That figure does not include closing costs or moving expenses. When should I start saving for a house? The sooner you can start saving for a house, the better. But if you have a lot of debt, it may make more sense to pay down some of it before saving for a house to have a better DTI ratio and qualify for better mortgage rates. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Yahoo
15-07-2025
- Business
- Yahoo
A Realtor Warns: Don't Make These Common First-Time Homebuyer Mistakes
Purchasing your first home is both an exciting endeavor and a complex process. Between today's low housing inventory and securing a manageable interest rate, navigating the real estate market for the first time can be a challenge. To help you gain insight into the process and current market, we tapped New Jersey-based Compass realtor Caterina Peters to share the top mistakes first-time home buyers make. According to Peters, a successful home buying process starts with assembling the right team of professionals, including a skilled real estate agent, a good lender, home inspector and real estate attorney. Thorough research of the local neighborhood, the types of loans you may qualify for and all upfront and potential future costs is also of utmost importance. Although there is some apprehension about taking the plunge into homeownership given today's high mortgage rates, Peters says, 'Because of limited inventory and the rising rents, people are still definitely very eager to get into a home.' Since it doesn't look like interest rates will drop anytime soon, Peters says creative financing and flexibility are key. Keep reading for her advice to avoid unnecessary stress both now and down the road. Before you start perusing Zillow, speak with a lender to get pre-approved for a mortgage. "This way, you know your budget and types of properties to view within your comfortable price range," Peters says. Having a concrete number in mind is an essential starting point, as it focuses your house search and provides a sense of future costs, including monthly mortgage payments and closing costs. "Speak with a few lenders to shop around and see who is a good communicator and will guide you through the process, since there will be a lot of paperwork and questions to answer," Peters advises. Just as you shop around for the right house, shop around for the right lender and compare their offers to find the best deal. "Often, when working with a large lender, you may be passed off as an anonymous number and not have a point of contact when questions or concerns come up. In this process, relationships are of the upmost importance, so you are comfortable," Peters adds. Navigating the complex process of finding and purchasing your first home is made infinitely easier with the help of a good real estate agent. "Connect with a knowledgeable and ethical real estate agent who will guide you through the process, and suggest different types of properties and areas based on your needs and price range," Peters says. She adds that the real estate agent is also the person who sets expectations during the process and negotiates a good deal on the best property for you. In addition to picking the right real estate agent and lender, Peters stresses the importance of another key role on your team: the home inspector. "Your home inspector is an important person on your team, as they will thoroughly inspect the property to let you know of any potential repairs or defects." This can save you a lot of money down the line, whether you choose to walk away from a property when an inspection reveals serious concerns or you gain leverage to negotiate with the seller. What's worse than choosing the wrong inspector is waiving the home inspection altogether. While it may seem like a good way to save money upfront or to get the seller to reduce the asking price, it's highly risky. You'd be purchasing the property without full knowledge of its condition, which can be costly in the long run. "Your mortgage professional will ensure that you purchase the home with a loan product that has the best interest rate and terms so the payment is comfortable," Peters says. Committing to higher monthly payments beyond your family's budget is where many people make a major mistake. Your credit score is an important financial component of the home buying process from start to finish. A lender will run a credit report to help determine the mortgage amount you are pre-approved for, but it doesn't end there. Before you close on the home, your credit report will be pulled again to ensure everything is in order and the sale can proceed as planned. For this reason, maintaining a good credit score is of utmost importance. Also, it's best to avoid opening or closing bank accounts, applying for new credit cards and making any large purchases during this period. While you may have found the house, keep the whole neighborhood in mind during your search. You can renovate and upgrade a home, but you can't change the neighborhood or location. Consider the type of community you appreciate, the home's location and its proximity to your work, schools and amenities. You should also think in terms of resale value when viewing properties. Some states require a real estate attorney to complete the transaction, in which case it pays to do your due diligence and pick the right one. Keep in mind that this will be an additional cost. "Your real estate attorney's role is important, as they negotiate the key terms of the contract and add clauses that will protect you during the purchase process," Peters explains. This is another reason why working with a knowledgeable real estate agent is essential, as they can recommend a trusted real estate attorney to join your team. People often think a 20% down payment on a home is the standard. However, that's not necessarily the case, especially if you are a first-time homebuyer. There are FHA loans, which allow you to put down as little as 3.5% if you meet certain financial requirements. There are also VA loans that don't require a down payment for veterans, and USDA loans through the Department of Agriculture that don't call for a down payment on properties within certain areas. You can also take advantage of various first-time homebuyer programs, whether they are federal, state or employer-based. Get informed about the upfront costs involved in purchasing your first home. The last thing you want are surprises along the way. Ask your real estate agent for a list of costs to expect during the process and even after you purchase the home. Along with the down payment, there are other costs such as a home inspection or a real estate attorney's fee. Buying your first home is likely the biggest purchase you have ever made, but blowing through your entire savings to close the deal is not wise. Unexpected expenses arise even long after you close on the property. If you are transitioning from a small studio apartment, furnishing your new home may be expensive. Or, if you've never had a backyard and now have one, maintenance and new equipment will require extra purchases. Additionally, this is also where a home inspection comes in — it gives you an idea of the cost to replace or renovate things around the house, as well as a time frame for when those investments will be necessary. Timing is everything when it comes to buying a home. Sometimes, first-time homebuyers wait so long to find the "perfect" house that they miss out on good homes and end up over-paying when they're suddenly in a pinch to move. On the other hand, others who make a hasty decision miss the opportunity to save more for a down payment. They might also settle on a home they don't love just because they were in a hurry. While purchasing a fixer upper may seem appealing as both an investment and an exciting project, being realistic about renovation costs is essential to avoid future frustration and debt. Speak to a knowledgeable contractor to get a ballpark estimate for the work that needs to be done, evaluate what jobs you need to hire professionals for and those you can take on yourself. Be wise about how much you invest in the property to ensure it's worth it in the long run — both in a personal sense and in terms of resale value. "Do your research and explore options," Peters says. "Sometimes, when you think outside of the box, you may end up finding something that is perfect for you that was not on your radar." Instead of fixating on a specific type of house or a certain neighborhood, be a bit flexible. Visit a variety of properties within your budget to make a well-informed decision to find your dream home. 'Don't get caught up in what you think is a high interest rate,' Peters says. While you need to consider whether you can realistically afford the purchase or not, the realtor says you shouldn't let what seems like a high interest rate stop you from buying your first home. Given the interest rate trends over the last few years, Peters doubts we'll see the return of 3% or 4% rates anytime soon — perhaps we'll see 5% rates at best. Instead of letting this discourage you, Peters suggests getting creative with financing, whether that means doing an interest rate buy-down for the first year or two or waiving certain contingencies. When it comes to purchasing their first home, people typically budget for monthly mortgage payments but forget to budget for soft costs. Peters says these include everything from future tax increases and insurance fluctuations to preventative maintenance and potential repairs. 'People budget for new furniture and all the fun stuff, but you should definitely put something aside for a rainy day if there's a leak or repair you weren't anticipating,' Peters notes. Before you make the purchase, Peters advises doing your local research. While your realtor will guide you through the home search and purchasing process, Peters shares there are certain things that, as licensees of the state, real estate agents cannot speak to — such as safety or quality of schools. It's the potential buyer's job to dig deeper and learn about the local area. Here are key areas Peters suggests researching: Any kind of environmental issues Safety (including checking the registered sex offender list) Schools (including school board funding, types of programs available and programs they plan on cutting) New residential or manufacturing developments being built If it's a condo, the building's condition and financials "It's really important to do your due diligence to find out what's beneath the surface of the community you're looking at," Peters says. A neighborhood may look very different on Monday morning than it does on Friday night or Saturday afternoon. For this reason, Peterson always recommends visiting the neighborhood at night and on a weekend. 'Because then you can see who's home, who's not, when people are not at work, and what they're doing,' Peters says. Consider things like music that's being blasted, people hanging out outside, trash being left around and what's happening in your potential neighbors' backyard. People are often eager to renovate and reconfigure a house to suit their needs and while that's not a bad thing, doing so without thinking long-term can cause issues down the road. 'You can never really anticipate the changes that life may bring to you, whether that's a new partner or changes in family dynamic [and] if you renovate, you don't want to go too specific with your finishes because that may not be appealing for resale value to potential buyers,' Peters says. Similarly, if you reconfigure your new home too specifically, the new layout may not work for you or potential buyers in the future. 'For instance, if you have a house and you remove all of the bathtubs, that may not be great for resale value in the future for a family that wants to come in that needs one bathtub at least if they have children,' Peters explains. You Might Also Like 67 Best Gifts for Women That'll Make Her Smile The Best Pillows for Every Type of Sleeper
News.com.au
26-06-2025
- Business
- News.com.au
‘Too hard': Couple's drastic plan to become homeowners
When Corey Le and his wife tried to buy a house in Melbourne two years ago, they quickly realised they couldn't afford it. Mr Le was a machine operator, and his wife was a factory worker. The pair earned just over $100,000 combined, but even two years ago, the average price for a home in Melbourne surpassed $900,000. Despite both working full-time, they couldn't save enough for a deposit while paying $600 weekly in rent. The couple was determined to fight to buy a home for their children to grow up in. Mr Le, 34, said it dawned on him that two full-time wages weren't enough to break into the property market. 'When I started to try and buy a house, it was too hard, and then I thought I need to do something extra,' he told The young couple isn't alone in their struggle. Financial comparison website Finder found that 87 per cent of first-time home buyers say it has gotten harder to save for a deposit in the last three years. The average time for first-home buyers to save for a deposit is just over 5 years. The report found that 27 per cent of Aussies will take 5-10 years, and 11 per cent will take a decade or more to save enough money for a house deposit. Over 90 per cent of first-time buyers had to sacrifice something or rely on a handout to save the required deposit. Mr Le took drastic action to get into the property market and started a cleaning business by posting a few ads on Facebook. He built up a little bit of business, but he needed to find more customers. From there, he found Airtasker, an app that matches workers with people who need tasks completed, and his business took off. 'Even if they do take a big cut, it got me out there, and it got me a lot more work,' he said. The app allowed him to build a dependable customer base, and he and his wife built up their business, Sparkling Clean. The couple kept their full-time jobs, and crammed in cleaning properties whenever they could. 'We did one job in the morning, then worked, then after work we did a few other jobs,' he said. Mr Le sometimes would start his working day from 3.30am and work till 10pm, practically working two full-time jobs. Within a year and a half, Mr Le and his wife had saved up $60,000. The couple immediately attempted to buy a family home in Melbourne - but it wasn't straightforward. 'It was hard. At the start, some of the houses were quite bad and in a bad state, but we thought maybe we could fix it up,' he said. Eventually, the couple found a house in South East Melbourne that they fell in love with and tried to buy. Mr Le ended up heartbroken when they missed out on the house by just $2000. People were putting in offers and the couple just missed out. 'It was the worst. You know, I had that feeling like 'this is my house,' and then we lost it, and you're like sh*t. I have to start again,' he said. The couple then spent weeks looking for a new home, and every weekend was crammed with inspections, but eventually, they purchased their home for $547,000. 'It was amazing! It is my first home. It was the best. Even though it is a bit far away, it is still good,' he said. The 33-year-old family man is still ecstatic that he was able to save up and buy a home, but he also pointed out that he doesn't believe Aussies are able to crack into the property market these days without getting creative. 'Before, you could do it with one wage. Now, you can't,' he said. Mr Le said there's no denying that it is really tough right now for families, and the housing crisis makes it even tougher. 'Childcare is expensive, food is expensive, it is hard to keep on top of all that, and then when you rent we were like paying $600 a week,' he said. Mr Le stressed that working another job outside his main work was the only way he could buy. It's been such a huge win for the young family, and their mortgage is only $100 more expensive than their rent. His side hustle has also turned into a full-blown business, and he quit his job three months ago to focus on it. 'I've got a good cliental base and a good word of mouth,' he said.
Yahoo
20-06-2025
- Business
- Yahoo
U.S. home sale prices reach record of almost $400,000, report finds
The median home sale price in the U.S. just touched a record high, but new data shows that buyers are nevertheless paying below asking price. The median sale price hit a record $396,500 for the four weeks ending June 15, or a 1% increase from a year earlier, according to a Friday report from Redfin. But buyers are actually paying far less than sellers' median asking price, which stood at $422,238 for the same period, the real estate company's data shows. That means buyers paid 6%, or $26,000, less than sellers hoped they would. Americans are increasingly finding themselves squeezed out of the housing market, as mortgage rates remain high and the inventory of affordable homes remains low. As a result, the dream of home ownership, which is a meaningful way to build wealth, is becoming more distant for large swaths of the population. Last year, just 24% of home sales came from first-time homebuyers, down from 50% in 2010, data from the National Association of Realtors shows. The typical first-time homebuyer's age also hit an all-time high of 38, according to the group. For those Americans who are trying to get their feet on the first rung of the property ladder, data from Redfin shows that sellers may be willing to be flexible on price, especially as there are now more sellers than buyers in the market. High housing costs and widespread economic uncertainty have hurt demand, Redfin said. As a result, the onus is on sellers to make sure their homes are in tip-top shape, and are reasonably priced, otherwise they're unlikely to sell, according to Redfin. "I'm explaining to sellers more and more that we need to be strategic in our pricing strategy because homes that are overpriced, even slightly, are likely to sit on the market and invite buyers to negotiate," Tulsa, Oklahoma-based Redfin agent Kelly Connally said in a statement. She added, "Pricing is most important, but with fewer buyers than usual out there, sellers should also make sure their home is in excellent condition and be ready to make repairs upon inspection." Buyers can't necessarily expect a discount on their home of choice, though. "There are a few exceptions: Homes in desirable locations that are in perfect condition are still hot and typically sell at or above asking price," Connally said. SpaceX Starship upper stage blows up Hurricane Erick approaches Mexico with destructive winds, major storm surge AI's extreme human imitation makes it act deceptively, cheat and lie, "Godfather of AI" says Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CBS News
20-06-2025
- Business
- CBS News
U.S. home sale prices reach a record of almost $400,000, but buyers may see some relief
The median home sale price in the U.S. just touched a record high, but new data shows that buyers are nevertheless paying below asking price. The median sale price hit a record $396,500 for the four weeks ending June 15, or a 1% increase from a year earlier, according to a Friday report from Redfin. But buyers are actually paying far less than sellers' median asking price, which stood at $422,238 for the same period, the real estate company's data shows. That means buyers paid 6%, or $26,000, less than sellers hoped they would. Americans are increasingly finding themselves squeezed out of the housing market, as mortgage rates remain high and the inventory of affordable homes remains low. As a result, the dream of home ownership, which is a meaningful way to build wealth, is becoming more distant for large swaths of the population. Last year, just 24% of home sales came from first-time homebuyers, down from 50% in 2010, data from the National Association of Realtors shows. The typical first-time homebuyer's age also hit an all-time high of 38, according to the group. For those Americans who are trying to get their feet on the first rung of the property ladder, data from Redfin shows that sellers may be willing to be flexible on price, especially as there are now more sellers than buyers in the market. High housing costs and widespread economic uncertainty have hurt demand, Redfin said. As a result, the onus is on sellers to make sure their homes are in tip-top shape, and are reasonably priced, otherwise they're unlikely to sell, according to Redfin. "I'm explaining to sellers more and more that we need to be strategic in our pricing strategy because homes that are overpriced, even slightly, are likely to sit on the market and invite buyers to negotiate," Tulsa, Oklahoma-based Redfin agent Kelly Connally said in a statement. She added, "Pricing is most important, but with fewer buyers than usual out there, sellers should also make sure their home is in excellent condition and be ready to make repairs upon inspection." Buyers can't necessarily expect a discount on their home of choice, though. "There are a few exceptions: Homes in desirable locations that are in perfect condition are still hot and typically sell at or above asking price," Connally said.
