What's Stopping You From Buying A Home?

There are many different reasons why people are afraid to join the home buying wagon.

It's either they don't have enough money or they have very low credit score that they are afraid no lender would give them a loan. Others simply do not have information about the home buying process.

Here are the top 3 reasons why people aren't buying homes and the options available to overcome these hindrances.

1. Debt. Whether it's unpaid bills or credit card debt, having a lot of debt lowers your chances of getting approved for a loan. Aside from your income, lenders also analyze your debt to income ratio to determine your capacity to pay off the loan. If you're planning to buy a home in the near future, manage your finances and pay off your debts bit by bit. Do not max out your credit card and do not take on other loans like car loan or student loan.
2. Credit Score. You think your credit score is too low to qualify for a loan. Your credit score is the number that lenders use to analyze the risk of lending money to a borrower. There's a lot of factors affecting your credit rating including unsettled debts, payment history, outstanding loans and much more. It is difficult to determine the exact impact of each factor without looking at your actual report. So before you decide to buy a home, request for a copy of your credit report from the major credit bureaus. If you think your score is very low, you can improve your rating by analyzing the reasons why your score is low. Pay off unpaid bills, lessen your debt and improve your personal finances.
3. Not enough down payment. Here's a fact. You don't need to pay 20% for a downpayment; however the more money you put down, the better. Not all people know their down payment options and this is one of the most common reasons why people are hesitant to buy a home. You can buy a home for as low as 3% down payment. However, you will be subjected to private mortgage insurance or PMI.

Still having second thoughts about buying your home? You can get pre-approved first to get better chances of winning the bidding war. Getting pre-approval also lets you know how much your lender is willing to loan you.

You also have to analyze and improve your personal finances before deciding to buy a home. Determine if you have enough income not only to pay the monthly mortgage payment, but the other expenses as well like maintenance, taxes, etc. When in doubt, ask your real estate agent for more info.