Buying a home remains a cheaper option than renting in the majority of markets across the country. As a result, lenders expect to see lots of mortgage activity this year. In fact, close to two-thirds of industry professionals believe the volume of purchase loans will jump this year per recent surveys. Optimistic outlook aside, prospective buyers still face hurdles. Here are a couple of the signs that buyers may need to hold off on applying for a mortgage.
Having a sterling credit score is not necessary to get a home loan, but a score of 620 or less could result in a buyer having a significantly tougher time obtaining financing, not to mention the much higher payments involved due to increased interest rates.
A typical down payment can cost about $7,500 to $12,500 if a buyer is applying for an FHA-backed home loan, and that’s not including the other costs involved like a home inspection or appraisal. On that note, if a buyer’s income is not stable, it will also present a hurdle as lenders prefer applicants that can be considered a safe bet.
Buyers should also remember that there are considerable costs in homeownership, from property taxes to homeowner’s insurance, and more. If money doesn’t allow for it, it may be wiser to hold off and avoid worrying about how to pay the next month’s bill or mortgage payment.
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