Following the housing crash in 2007, recovery in the market has been uneven, with many buyers held back by stricter lending standards.
But there are signs of life. Banks are beginning to loosen minimum requirements, with several lenders now offering mortgages with down payments as low as 3 percent.
To anyone buoyed by an improving economy and considering taking the leap, I’d recommend the following steps to prepare.
1. Find a mortgage that makes sense for your financial situation.
Look closely at the fine print of the mortgage you’re applying for. Buying a home can help you build equity and qualify for tax deductions. Unlocking these benefits depends on getting a mortgage that makes financial sense for you. For instance, a fixed-rate mortgage typically gives you a higher starting rate but also the security that your monthly payments will remain the same, whereas an adjustable rate mortgage’s interest rate often starts lower but could spike sharply and leave you scrambling. If you can’t find a mortgage that suits your situation, it is best to hold off and revisit the situation at a later date.
2. Student loans aren’t a mortgage deal breaker.
According to a report from the National Association of Realtors, almost 60 percent of first-time homebuyers said that student loans delayed their saving for a down payment. Student debt is commonplace enough now that in general, lenders will view it as they do any other debt obligation. Having student debt may not prevent you from obtaining a mortgage if you have used it responsibly.
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