Tag Archive for: First-Time Homebuyer Tips

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.

If you’ve entered the world of real estate as a first-time homebuyer and your head is saturated with questions, then acknowledge that you’ve come to the right place. If the whole process of searching for and purchasing a home has you feeling batty, then be relieved to know you’re completely normal. There are many steps, which you undergo as a buyer, many of which you’ll discover below. If this is your first-time buying a home, we suggest the followings steps as you move forward. Remember, we’re always standing by to provide any assistance you might need.

Commit to the purchase

Sometimes those uncomfortable feelings creep up as you embark on the buying process. These feelings can certainly be good as you want to make sure you’re ready to buy. It is, after all, a large investment you’re undertaking. Homebuyers of all stages in life, but especially first-time ones, should review their financial situation and see how much home they can actually afford. Evaluate factors such as your monthly income and expenses. During this process you’ll also want to bear in mind your debt as well as your credit scores. What are other important benchmarks while evaluating your finances? Saving up for a down payment, having a stable salary, having an emergency fund and knowing you won’t have to move within five to seven years or less make judging if now is the right time to buy a little easier. When you’re serious about purchasing a property, have funds set aside for a down payment, closing costs and other related expenses.

Stay up to date with your credit score

As mentioned above, this a step not to be overlooked. In the months leading up to your home search, stay on top of your credit. Mortgage lenders like to see consistency and predictable behavior patterns from potential buyers. Paying your bills on time is critical, therefore make every effort to do so. Another thing you’ll want to keep tabs on is your credit utilization ratio. This is generally defined as your total credit used versus your total credit available. The lower, the better, and aim to stay below 30%. Your credit history (average age of your credit), new lines of credit and a mix of credit can also affect your score, and in turn, mortgage approval. Speaking to a lender about these things will help provide you context and give you direction as you journey toward homeownership.

Seek out a lender and preapproval

Another consideration to take into account is obtaining mortgage pre-approval. You’ll want to minimize any surprises as well as show the seller you can afford their property. By getting pre-approval for a mortgage and knowing you can purchase a home in a certain price range, you’ll have a clearer picture of your purchasing power. It’s imperative to understand how much home you can afford from the start. This will give you confidence when submitting an offer to a seller, through your real estate professional, once you’ve found the right property. Seek out the expertise of a few different lenders, including at least one local bank. You want to land the best deal, so don’t settle for only one quote. See what interest rates they’re offering and how that will affect your payment. Adjusting the down payment, amount borrowed and the loan term will also affect your monthly principal and interest payment. The lender you choose will also analyze your debt-to-income ratio to see what loan programs you’re eligible for. Popular loan options include: conventional, FHA, VA and USDA.

Wish list

As you begin to assemble your wish list — exciting, isn’t it? — it’s crucial to consider any needs you currently have and any future ones you might be able to anticipate. Create a list and prioritize your needs over your wants. What is essential for you and your family? Think about size, layout and other features. Your research will expose you to different neighborhoods and school districts. Consider your proximity to good schools and amenities that might be of value to you.

Choose a qualified buyer’s agent

This is why it can be beneficial to work with a real estate professional who has a thorough grasp on local market conditions and is very informed about the area you’re interested in. Never underestimate the benefits of teaming up with a REALTOR® or real estate agent, who will represent your best interests and guide you through the buying process. A buyer’s agent will assist you in your search, direct you through showings, offer you sound advice, help you submit an offer, negotiate with the seller, anticipate the next steps, leading you to settlement and beyond.

Home inspection and negotiation

Once you believe you’ve discovered the home, which is a good fit for your situation, it’s important to conduct a thorough inspection with a properly licensed home inspector to identify any potential issues or problems. This can help you negotiate repairs or price adjustments before finalizing the purchase. Remember, when you write up an offer, you can negotiate a number of items other than price, such as repair work or renovations to be included/completed prior to closing.

Under contract

If you’re uneasy about signing a contract, such as an agreement of sale or buyer’s agency agreement, review the documentation with your agent and seek other legal advice, if necessary. It’s important to review all documentation, including the mortgage terms, homeowners’ association (HOA) rules, if applicable, and all other legal obligations related to the home.

Closing costs

It’s easy to forget these upfront expenses as you set sail toward homeownership. In exchange for the services provided by your lender, attorney and/or title company, you’ll need to pay costs for inspections, appraisal fees, title insurance, attorney fees, transfer tax, etc. at or before closing.

Overall, the homebuying process is exciting, but it can be challenging, notably if it’s your first-time. Taking these steps and considerations into account will encourage a smoother homebuying experience.

If you’d like to review these tips as well as download our guidebook for even more strategies in homebuying, click here.

Visit our first-time homebuyer page for more information.