1. "I have no money for down payment or closing costs"
Response: There are many different types of programs some of which are geared for people who don’t have a significant amount to put down. One program in particular is the SONYMA program available to New York residence. They provide 97% financing with a 3% down payment assistance loan that is completely forgivable so long you live in the home for a certain amount of time. (100% financing). Another great program is the FHA mortgage that only requires 3.5% down which can come from a gift, retirement account withdrawal, and many other sources. They will also allow a 6% sellers concession where the seller will credit you 6% of the purchase price back to you so that you can pay your closing costs. There are many great loan programs for all different types of borrowers.
2. "My Credit is no good"
Response: you need some form of credit to obtain a mortgage however there are some programs that will tolerate some “scratch and dent” credit. Many buyers don’t realize that they can actually pay down some debt and the mortgage company can do something called a rapid re-score that will increase your credit scores overnight. That could be the difference of qualifying and not. In addition banks will tolerate judgments on your credit so long that they are paid. Don’t make assumptions and meet with a professional to evaluate your credit with you. Most of the time a few easy adjustments and payments could raise your credit score 20-60 points overnight!!!
3. "Even if I qualify on paper I can’t afford those mortgage payments."
Response: Most people heard about the tax benefits of homeownership but don’t fully understand how they work. Assuming you will not be taking out a loan for 1.1 million than you can take advantage of the tax benefits. The real estate taxes and interest portion of your mortgage payment are tax deductible. So assuming real estate taxes are $8,500 and the interest paid for the year is $14,507 (300,000 at 4.5% interest) your total deduction would be $23,007. If you multiply your total deduction ($23,007) to your current tax rate than you will find out how much extra cash you will receive from being a homeowner. So assuming you tax rate is 31% than 23,007 x .31 = $7,132.17 or $594 per month!!!
It’s important that you seek the information from a professional who will guide you and educate you fully about buying a home. The anxiety of not knowing is much worse than finding out you have to do a few things before you can buy a home. It’s important to have a plan so that you’re ready when the time feels right!!!