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Should first-time homebuyers take the plunge?

[Jul 21, 2011.]

 

What's a first-time homebuyer to do in this troubled housing market? On the one hand, you may be eager to finally get a place of your own. But on the other, endlessly hearing about economic woes and declining property values may keep you on the fence. The good news is that if you have your financial house in order and view your situation realistically, you can probably snag a great deal on a house right now. Here's why.


Current mortgage rates are very affordable


If you have excellent credit, a healthy income and a decent down payment, you're on track to getting approved for a low mortgage rate. Check your credit to get your most recent credit score. Many mortgage lenders are offering the best mortgage rates to people with scores above 720. But lenders are really scrutinizing borrowers right now, so be prepared to show documentation for everything.


Housing prices continue to fall


The price of homes has continued to decline as the housing market has struggled to recover. While this is bad news to the millions of homeowners who are underwater on mortgage loans, it could work in your favor on the path to home ownership. Your dollars will stretch a lot further when buying a home and you may be able to get features that would have been only a dream a few years back.


Sellers are willing to deal


Many homeowners are desperate to find a buyer. You may be able to purchase a property well below the asking price if the owner is really trying to get rid of his house. Another option that may be available to you is purchasing via a short sale. Sellers who are financially distressed turn to short sales so that they can sell their property for less than what they owe their mortgage lenders. You may be able to get a home for well below the market rate, but be prepared for possible delays in the short sale process before getting to closing.


Assistance for first-time buyers


Despite problems in the housing market, you could be eligible for special programs offered to first-time homebuyers. That help could come in the form of low-interest mortgage loans, grants, help with repairs or financial counseling. Check with the Department of Housing and Urban Development and local agencies to find out what help may be available to you.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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