Tag Archive for: Downpayment

Getting A Home Loan When The Cards Are Stacked Against You

We all find ourselves in non-ideal situations from time to time. This happens financially for many of us, whether due to an unexpected setback, financial habits that compromised our budget or simply feeling underprepared for the home-buying process. These challenges might make you think that homeownership is out of reach, but with the right strategies, achieving your dream is possible. Understanding how to get a home loan — even when the odds aren’t in your favor — can make all the difference.

At Realty Network Group, we understand the hurdles you may face. Our experienced agents and connections to trusted local lenders are here to guide you every step of the way. Whether you’re buying your first home or working through financial challenges, we can help you find a solution.

Five Factors That Can Prevent Loan Approval

Before exploring the strategies for how to get a home loan, it’s essential to understand the common reasons why lenders might deny a borrower. Here are five significant factors:

1. Unstable Employment

Lenders prefer borrowers with steady, documented income. If you lack a consistent work history, particularly over the past two years, it could be a red flag. This is especially true if you’ve frequently switched industries or have gaps in employment.

2. Low Credit Score

Credit scores play a critical role in determining whether you qualify for a loan. Many people underestimate how much weight lenders place on this number. Scores below 500 can make it difficult to secure financing, though some programs may still be available with additional requirements. For a more in depth approach to improving your credit scores, check out these seven practical steps for elevating your score.

3. High Debt-to-Income Ratio (DTI)

Your debt-to-income ratio reflects how much of your monthly income goes toward debt payments. Usually a ratio over 43% (specifically in relation to back-end DTI) signals to lenders that you would be a higher-risk borrower. If you’re carrying significant credit card, student loan or car loan debt, this ratio could prevent you from qualifying.

4. History of Bankruptcy or Foreclosure

If you’ve gone through bankruptcy or foreclosure, lenders may require a waiting period of two to seven years before approving your loan. These events signal financial instability, making it harder to secure a mortgage.

5. Insufficient Down Payment

While there are loan programs with lower down payment requirements (i.e., FHA or VA loans), having little to no savings for a down payment can make it challenging to secure a loan. A larger down payment reassures lenders of your financial stability.

How to Get a Home Loan: Strategies That Work

If you’re facing any of these challenges, don’t worry. Here are seven practical strategies to help you improve your chances of securing a loan:

1. Build a Stable Income Stream

Consistency is key when it comes to employment. Lenders favor borrowers with steady jobs, so aim to maintain your current position for at least two years. If you’re self-employed, prepare additional documentation, such as tax returns and profit/loss statements, to demonstrate your income stability.

2. Improve Your Credit Score

Your credit score can significantly impact your ability to get a loan and the interest rate you’ll pay. Here’s how to boost your score:

  • Pay bills on time.
  • Reduce your credit card balances.
  • Avoid opening or closing lines of credit.
  • Dispute any inaccuracies on your credit report.

Even small improvements can make a big difference. For example, moving your score from 600 to 650 could open the door to better loan terms.

3. Lower Your Debt-to-Income Ratio

Reducing your DTI can improve your loan eligibility. Focus on:

  • Paying off high-interest debt first.
  • Avoiding new debt.
  • Increasing your income, even temporarily, through additional work or side gigs.

By lowering your debt and increasing your income, you can present yourself as a less risky borrower.

4. Save for a Larger Down Payment

While some loan programs allow for minimal down payments, saving more upfront can strengthen your application. A larger down payment reduces the loan amount and shows lenders that you’re financially prepared.

5. Explore Loan Programs

Not all loans are created equal. Programs like FHA loans (3.5% down) and VA or USDA loans (no down payment required) can make homeownership more accessible. Realty Network Group’s agents can help you find the right program for your situation.

6. Consider a Co-Signer

If you’re struggling to meet the requirements on your own, a co-signer with strong credit and financial stability can increase your chances of approval. However, make sure you fully understand the responsibilities and risks involved for both parties.

7. Seek Professional Guidance

Navigating the loan process can be overwhelming, especially if you’re unsure where to start. Realty Network Group’s agents have extensive experience helping clients overcome financial challenges and can connect you with trusted local lenders who specialize in unique situations.

Overcoming Obstacles When Denied a Loan

If your application is denied, don’t lose hope. Use the rejection as a learning opportunity to identify areas for improvement. Here’s what to do next:

  • Review the Lender’s Feedback: Understand why your application was denied.
  • Take Action on Weaknesses: Whether it’s improving your credit score, saving more or lowering your DTI, focus on addressing the issues highlighted by the lender.
  • Reapply When Ready: Once you’ve made progress, revisit the loan application process with greater confidence.

Realty Network Group’s agents are here to support you throughout the journey, ensuring you have access to the resources and guidance you need.

Why Work With Realty Network Group?

At Realty Network Group, we don’t just help you find a home — we’re committed to supporting you every step of the way. Here’s how we can help:

  • Expert Agents: Our team is experienced in navigating complex financial situations and finding solutions tailored to your needs.
  • Trusted Local Connections: We partner with reputable lenders, inspectors and contractors to streamline your homebuying experience.
  • Comprehensive Support: From helping you understand how to get a home loan to finding the perfect property, we’re with you every step of the way.

Remember, Realty Network Group’s agents are always here to help you.

Ready to Take the First Step?

Homeownership is within reach, even when the odds feel stacked against you. With patience, preparation and the right support, you can secure a loan and find your dream home. Contact Realty Network Group today to learn more about how we can help you navigate the path to homeownership in Northeastern Pennsylvania.

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5 Factors To Consider When Buying A Home This Spring

There are many considerations a homebuyer should understand when purchasing a home in the spring. Here are five things you might want to consider before you dive in too deep in search for a home:

  • Save for a downpayment. This is something you should be doing well before you begin looking for a home. Having a sizable down payment can help you when shopping for a loan and lower your overall monthly payment as well. The process of saving can be challenging with bills and other monetary obligations in play, but the rewards can pay for themselves over the life of a loan. As a buyer, understand that there are different mortgage options available and with them come varying degrees of downpayments. Some buyers have a misunderstanding that they must come up with 10% to 20% of the purchase price, but that’s just not the case.
  • Get pre-approved for a mortgage. Doing this early on is crucial to understanding your budget and making competitive offers while home shopping. If a seller has more than one offer on the table, the pre-approved purchaser will usually be in a better position than the one whose offer wasn’t accompanied by a pre-approval. Furthermore, you won’t over-reach as a buyer. One of the most frustrating things we witness is interested parties not being able to afford homes they’re actively pursuing. With a pre-approval, a conservative range of values provide a clear roadmap for both you and your REALTOR® as you seek your dream home or investment property.
  • As homebuyers emerge from colder weather, especially a winter that’s served up some slick and treacherous conditions, they might look to areas that don’t need to endure the brunt of the season. Perhaps they choose a shorter commute to work in order to spend less time on the roads. Likewise, a garage may be an upgrade for someone who’s never had one and who’s had to deal with the challenges of leaving the house on cold or snowy winter mornings. Spring fever brings these thoughts into the minds of buyers as they set out to find their next home. Thus, it’s essential to determine the locations or neighborhoods you’re leaning toward. If you don’t have specific neighborhoods in mind, take into account factors like proximity to amenities, schools or work to help you narrow down your choices.
  • Understand the current market conditions, such as inventory levels and pricing trends. Should you buy now? Are you in a buyer’s or seller’s market? This will help you understand if a seller is willing to negotiate or if you have to be ready to immediately make an offer when you find something you love. Working with a knowledgeable real estate professional can ensure you’re up on these trends. Presently, in Northeastern Pennsylvania, we’re struggling with a deficient supply of homes. Since June 2020, we’ve fallen from a balanced market. Plummeted so much so that our present inventory of residential properties (an absorption rate of 1.95) more closely resembles the lifeless numbers we experienced in this market between February and April of 2022 (with an average absorption rate of 1.44) than anything looking like we’re emerging from this seller’s market.*
  • Some may consider this a shameless plug, but as any market begins to heat up and the temperature changes, it’s critical to have trusted professionals who will guide and support you on your quest toward homeownership. Home inspectors, appraisers, mortgage lenders or advisors, surveyors, real estate agents and the like all play significant roles in helping you attain your real estate goals. Take the time to interview real estate agents, if you don’t have one in mind. Have a series of questions ready that you might have entering this market. How can the agent you’re considering hiring address these concerns? Do they have the experience needed to help you overcome any challenges you might have standing in your way? Learn about their expertise and how long they’ve been in the industry. Also, ask them about current trends in the market. Make sure they’re a good fit for you and a good listener too!

Spring is a fantastic time to do some cleaning, a thorough one, not only of your residence, but also of the clutter which could be standing between you and purchasing a house or investment property. Tackling these five things can prepare you for success, in any market, as you journey toward homeownership.

 

* Greater Scranton Board of REALTOR® data

 

For more, check out our buyer FAQs.

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