• Home
• Property Search
  • Foreclosures
  • Neighborhoods
• Buyer
  • Can I Buy
  • Buyers Agent
  • Foreclosure Search
  • Disclosure
• Seller
  • Avoid Foreclosure
  • Selling Process
  • Seller Tips
  • Pricing Your Home
• About Portland
  • Market Conditions
  • Blog
  • Portland Drive Times
• Our Agents
• Contact

Credit & First Time Home Buyers - Can I Buy A House?

Owning your own home is the American Dream. Making that happen may be easier than you think. The most important hurdle is financing. If you can get a mortgage loan you can buy a house. Talking to a Lender is the best way to find out (see right side bar for references).

Credit Score

The two biggest reasons Buyers don't qualify is poor credit and lack of a down payment. Your credit doesn't have to be perfect but you do need to show a history of making payments on time. Your credit is determined by your FICO score which the Lender will pull from the three major credit reporting agencies. Scores range from around 500 to over 800. The magic number is a score above 620. The Lender will throw out the highest and the lowest number and use the middle one. If two people are purchasing together the lowest ‘middle score’ of both is used. This is not negotiable. If your credit score is not high enough to purchase a home right now, you can and should work to improve it. There are lots of resources on the web to explain how.

Down Payment

Typically home buyers will need some money for a down payment and closing costs. The lowest down payment option today is 3.5% with an FHA Loan. This is the most widely used loan program for First Time Home Buyers. There are some local and federal grants available to assist qualifying buyers. The down payment can be borrowed from a family member (with documentation), but otherwise you will have to prove it is yours by providing bank statements. . In addition to the down payment, you will need to consider the closing costs (usually about 2% of the sales price). Your Buyers Agent can negotiate for the Seller to pay the closing costs thereby reducing your up-front costs. Either way, you will need cash on hand for the Earnest Money Deposit (usually $1500-$2000), and the home inspection (approx. $400). The earnest money deposit is considered part of the down payment.

If you pass the first two hurdles, the Lender will next look at your employment stability and your debt ratio with the new payment figured in. With that information the Lender will tell you exactly how much you can afford to spend on a home purchase. Remember, the lower the interest rate the more you can spend. That's why now is the best time to be buying a home. Interest rates are in the 4.25-4.75% range which is the lowest in over 50 years.

Cost of Ownership

Ongoing cost of ownership is something Buyers often overlook. In addition to the utilities you will now be responsible for all the maintenance. More than just fixing things that break, there are preventative measures necessary to keep a home in good condition. The future value of your home is directly related to how well you take care of it. A home inspection before you purchase will help make sure you don't inherit others lack of attention to this.

Working with an Exclusive Buyers Agent is the best way to be sure your interests are protected. She will guide you through the process and prevent you from making any serious mistakes. If you are ready to become a homeowner, call us at 503-678-2020, or email Jolynne.