Pitfalls When Buying Your First Lehigh Valley Home

Statistically, every year approximately 40% of real estate sales are First Time Home Buyers. Last
year was no different as more than 37% of the home sales were first time
buyers.

One of the major problems Lehigh Valley First Time Home Buyers are facing is getting a mortgage.
The motivation is there but things like enough money and credit scores are
causing a problem.

As the government tightened the guidelines they made it tougher for a buyer to get a mortgage.

An ideal buyer has above a 640 credit score and a debt ratio below 45% (gross/debt each month). In addition, they have enough money saved up for the down payment (depends on loan type) and closing
costs.

As the credit score gets lower, the debt to income ratio becomes more important.(your credit isn't as good but you have less debt...makes sense).

Mortgage lenders have different qualifying factors and even if one mortgage company says No, another may say Yes.

With this in mind, there are couple of different Lehigh Valley Mortgages available:

FHA - minimum of 3.5% down payment - the buyer must have this money or have it gifted to them. This does not include the closing costs which can run 5-6% (FHA does allow up to 6% sellers assist for these costs). This is the most common loan with Lehigh Valley First Time Home Buyers. Buyer pays a monthly PMI (principle mortgage insurance) until 20% equity is obtained on the home.

USDA - 100% financing but only available in rural areas promoted by the Department of Agriculture (many homes in the Lehigh Valley qualify). The buyer must meet certain guidelines but can purchase a home with very little money. The closing costs can be buried in the mortgage using sellers assist. No PMI.

VA - 100% financing available but only to active or prior military members. Closing costs can be put into the mortgage using sellers assist.

Conventional - 5, 10, 15, or 20% down is required with the minimum down payment being lower as your credit score is higher. Unless, you put down 20% you will still have the monthly PMI that an FHA loan incurs.

As interest rates float in the 4% range, now is a great time to buy your first Lehigh Valley home. You just need to qualify for the mortgage.

Visit www.lehighvalleyhomesonline.com for all of your Lehigh Valley Real Estate information.