Mortgage How Much .com

While homeowners are feeling pain because their home values have fallen, for young people thinking about buying their first home, falling values mean lower prices for that starter home.

Do you want to buy a new house but are worried about all the problems in the housing market? Don’t forget, this is a very good time to buy a home precisely because the market’s struggles have lowered sale prices and created a large inventory of available houses to choose from.

It might be harder to qualify for a home loan than in recent years but there still are many positives to owning a home compared to renting that make it worth the effort. Here are a few of the advantages:

1. You won't be at the mercy of a landlord who can raise prices any amount they please, year after year;
2. You will have freedom and independence with things like painting walls, interior construction and landscaping;
3. You can reduce your taxable income by claiming the mortgage interest and property taxes you pay;
4. Over the long run, home values still appreciate. You would never know it by listening to the news these days. But what many don’t mention when they lament that home values have fallen 15-25% in the last two years is that home values in many parts of the country went up over 50% from 2000 to 2005. So even if you account for a drop of up to 25% in the last two years, if the value went up 50-60% in the preceding six years, you are still 25% or more ahead.

Getting a home mortgage will be harder than it has been in recent years. Don’t think of it as not worth considering, though. Instead, learn the new requirements and work toward achieving them.

Here are two of the most important new requirements:

1. A strong FICO credit score of 720 or higher may be necessary, experts say. If your score isn’t high enough right now, don’t give up. It is worth the effort to start trying to improve your score now. A higher FICO score will help lower interest rates if you try to get a car loan, a new/better credit card or when you go to buy insurance. Paying down debt can improve that FICO score and you will also end up paying less interest on this debt. So check your credit report and do your best to reduce debt. Some lenders are more flexible than others and a higher FICO score can only help you.
2. A down payment of at least 3-5% may be necessary to make a home purchase in this new environment with tighter credit standards. If you don’t have that kind of money, don’t give up. Start saving and start planning ways to save. This is an opportune time to buy a house, especially your first home. Home ownership is still a worthwhile goal.