There are many challenges that await a homebuyer to get a property Zillow's research just mentioned the basic problems- of housing prices have soared, a dollar doesn’t go as far as it once did and rent is more expensive than in the past.
Know your options (and credit score)
There are many ways to get started with this but one thing pragmatic is to know your financial options including what mortgages you’re eligible for and how much you need (and can afford) to put down upfront.
Learning your FICO score helps lenders understand your capability. It is stated by the same research that
Many home shoppers aren’t sure how much they have to put down on a home, what the lender-required minimum down payment will be (it’s not always 20%), or what programs are available to help with down payments, like FHA loans.
Before buyers even start thinking about saving for a home, they should know what their financial resources are and if they’re eligible to buy."
Make enough money to save
A report from Zillow Group Consumer Housing Trends Report 2019 extracted data that renter households typically earn a median income of $37,500 annually, which is nearly $40,000 less than the median household income netted by households who recently bought a home (of whom the median household income is $75,000 annually).
While there are ways to enter into homeownership without making $75,000 in household income, it’s hard to afford to buy if you make significantly less.
Therefore, “If you’re making $37,500 per year, it’s probably not feasible for you to buy in almost any market,” said Zillow Chief Economist Dr, Svenja Gudell
Save enough cash to pass through the down payment.
One of the first problems that you need to have solutions for is the down payment. Quoting again the study Zillow conducted two-thirds of renters cited saving for a down payment as the biggest hurdle to buying a home, according to the Zillow Housing Aspirations Report.
“The down payment remains a hurdle for a lot of people,” says Gudell. “But they should know they don’t have to put 20% down.”
In fact, according to the Zillow Group Consumer Housing Trends Report 2019, only one-fifth of recent buyers (20%) put 20% down, and just over half of buyers (56%) but less than the traditional 20% down.
Know your deal breakers, but be flexible enough
“I do think people get discouraged when they look in their target neighborhood and they see homes around $170,000 when they’re looking for a $110,000 home,” Gudell says.
You need to be willing to take a longer commute to make a couple of trade-offs.