Don’t Assume You Can’t Get A Mortgage Loan
Among survey respondents purchasing a home, 58 percent were first-time home buyers, yet only 29 percent of homebuyers in the last three months were first-timers, according to the National Association of REALTORS®. The percentage of first-time homebuyers has been less that 30 percent for 17 of the past 18 months. The reason the number is significant is that it's well below the long-term average of 40 percent.
Nearly half (48 percent) of first-timers headed to a brick and mortar lender to meet with a loan representative and receive personalized advice, yet even then, 43 percent reported that they did not completely understand the process. And only 41 percent of first-timers said their loan officer completely explained the types of loans, terms, special programs, fees and options to reduce their down payment.
First-timers want more transparency in the process, but transparency works both ways. Lack of experience and uncertainty about the process may keep first-timers from asking the right questions that could result in the right loan. Buyers may also be reluctant to share key financial information that could help the lender provide better guidance.
For all these reasons, you should assume that your chances of getting a loan are better than you think, but only if you're willing to do two things — ask questions and share information.
Here are some suggestions to help you:
1. Look for a lender who is willing to take time with you. Be upfront that you're a first-time buyer and that you want to understand the process better. If you don't know a good lender, ask for referrals from people you know who have recently purchased a home.
2. Be willing to provide basic information your lender needs — income, debts and obligations such as child support or student loan.
3. Share your plans and dreams. If you want to flip the home in two years, say so. If you want to live in it for 10 years, say so. It will make a difference in the type of loan your lender recommends.
4. Come clean about any problems you think you may have getting a loan. If you weren't so great at paying bills while you were in school, you may have hurt your credit rating. Tell the lender that you may have possible derrogatories and what you've done to repair the damage.
5. Be flexible about your goals and don't try to get a loan that's beyond your means. You'll build equity and wealth much more quickly if you buy a home you can comfortably afford.
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