I’ve always said, The best time to buy a house is when you can afford it. Credit counselors at Clearpoint Credit Counseling Solutions share some resources to help potential homebuyers overcome some common homebuyer myths.
Myth: I need perfect credit to buy a home.
Reality: Loans are available for first-time homebuyers with a credit score of 620 or above. A first-time homebuyer is usually defined (by lenders) as someone who has not owned property in three years.
Myth: I can’t buy another home because I’ve lost my home to a short sale (or foreclosure).
Reality: It usually takes about three years of rebuilding credit, but those who have suffered from a foreclosure can usually buy again at that point but they will pay higher interest rates than those with clean credit scores or those who wait until the foreclosure falls off their credit report (usually seven years).
Myth: I can’t buy a house because I can’t save a down payment.
Reality: Various lender, state and federal programs can assist homebuyers in coming up with a downpayment. FHA, for example, now gives loan with a modest 3.5% down payment. In addition, some CalFHA (offered only in California) loans offer silent second loans of 3%. This money can be applied to closing cost or down payment. The borrower would only need to come up with 1% of the total loan amount.
CalFHA also gives grants of 3% of the loan amount to first-time homebuyers. The borrower only needs to come up with .5% down payment. The annual income limits for this program are $85,000 for Los Angeles, San Bernardino and Riverside Counties. Ventura and Orange County have a $104,000 annual income limit to qualify. Check with various lenders in your state to see what down payment assistance programs might be available in your state.
In addition, lenders often offer incentives to purchase your new home. Some lenders offer the WISH program. Under this program the lender will match three dollars for every dollar the borrower can save for down payment assistance to a maximum of $15,000. The borrower can have a maximum of $20,000 for their down payment. The borrower can receive monetary gifts for their down payment from family members. The money the borrower receives from the lender is a silent second. It will turn into a grant if the client lives in the home for at least five years. Citibank has $500,000 to offer during a calendar year from March 2011- March 2012. Unfortunately consumers did not take advantage of the program last year.
Attend a Homebuyer Workshop
To take advantage of the monies available, borrowers must attend a First-Time Homebuyer counseling session or class, like that is offered by Clearpoint. This workshop gives the attendees a certificate of completion they can to access grants or loans from financial institutions, cities, counties and states for down payment assistance. Down payment assistance can be very generous for those who qualify; they may go up to $75,000.