Surge in Home Sales to Younger Americans?
Because they are vital to the health of the housing market, first-time home buyers are a closely watched group. In recent years, they have been less active but there is new research indicating that the number of first timers is spiking. So what can new home buyers expect their first time through the home buying process? According to economist Jonathan Smoke, they may face more challenges in this market but can improve their chances by getting their finances in order, raising their credit score above 700, and planning for a down payment. “The market has seen growth despite higher prices in part because of pent-up demand from very qualified buyers who were able to meet the challenging mortgage qualifications that are the norm these days,” Smoke says. “A key question for the months ahead is whether a higher share of first-time buyers is ready or capable of qualifying for a loan and closing on a home.” In other words, if these potential buyers can get approved for a mortgage, there could be an upcoming surge in sales to younger Americans. The good news is mortgage credit has generally been more available over the past few years. Unfortunately, the flip side is that, at the same time, a higher percentage of buyers report having trouble raising their credit score and difficulty saving for a down payment. Here are a few things you can do to improve your credit score according to myFICO.com:
- Check Your Credit Report - Be proactive. Check your report for errors. If you find errors, dispute them with the credit bureau. (Here's how to get a free credit report.)
- Setup Payment Reminders - Late payments are one of the biggest contributing factors to your credit score. Life is hectic, its easy to forget to make a payment. Figure out a system that ensures your payments will all be made by their due dates; automatic payments, payment reminders either directly thru
the company or thru your calendar app on your phone, a physical bill sorter box using snail mail... everyone is different, find what works for you and stick to it.
- Reduce the Amount of Debt you Owe - Start with credit cards. STOP USING THEM and get them paid off. Pay off higher interest rate cards first and work your way down. Most mortgage companies like to see a debt (including your mortgage payment) to income ratio of 35% or lower. Many times, first time home buyers are surprised to learn that student loans contribute to that number. Contact your lender so you can have a conversation about what debts will be considered in your debt load.