It can be difficult to purchase a home when you are a young buyer who is new to the process. In fact, there are specific challenges that young buyers face, and it’s important to know what they are so you can guard against them when possible.
Challenges Young Buyers Are Facing: Credit Restrictions
You may not have a long credit report, and you probably think that’s a good thing. It means you haven’t borrowed a lot of money. While that is good news, not having any credit when you try to buy a home creates a problem. Bad credit lowers your credit score, but so does no credit. In Charge explains that having invisible credit is often treated the same as a bad credit score. When lenders have no evidence that you have paid off companies you owed in the past, they likely won’t be able to give you a good mortgage rate. You want to have a record of established good credit before you try to purchase a house.
Challenges Young Buyers Are Facing: Student Loan Debt
Student loan debt will likely follow you for at least a couple of decades of your post-college life. While this means you will have an opportunity to add something to your credit report, it also signifies that a large amount that you owe will be staring lenders in the face when they are trying to decide whether to loan you more money.
According to Kathy Fobian, lenders are slowly waking up to the reality of student loan debt and offering better rates so that more people can afford their way into the market. However, you can expect a large amount of student loan debt to be a possible barrier to either receiving a mortgage loan or being offered a decent rate.
Down Payment Problems: Challenges Young Buyers Are Facing
The process for obtaining a mortgage loan can be pretty strict, and a down payment is often required. Though the down payment may not have to be a full 6% to 10% of the home’s price, saving less than that can be a challenge when home prices are high. Young buyers who are just getting established at a job may not be pulling in the income to put money back for a down payment. Novi suggests creating an emergency savings fund is created prior to saving up for a downpayment. This means relying on some sort of windfall to have enough money to even start the house-buying process.
Homeownership is not impossible for young buyers, but it does come with unique challenges. Learn everything you can before you start the purchasing process to have the best chance of being successful.
Here’s another article you might enjoy: What to Know About Choosing Solar Power for Your New Home
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The Southwest Florida Real Estate Investment Association is the leading source of SWFL real estate investing events that provide investment education and networking in southwest Florida. We analyze the housing market and foreclosures and provide information, education and networking events in order to build a network and knowledge base for investors and potential investors. Our members include real estate agent, brokers, investors, hedge fund managers, rehabbers, wholesalers and more.
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One of the premier sources for real estate investing networking and education is the SWFL REIA. In the real estate world, the SWFL REIA is different in that they do not do information product sales. Their meetings are focusing on the best ways of investing in real estate by collaborating with other property investors who are sharing their experiences.
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