Faye's Blog

By Faye Miran
Guest columnist - Ventura County Star- Article featured Sunday, March 13, 2011

Contrary to what you might hear or read in the news, home loan financing is not as hard to get as you might imagine. This is especially true for first time home buyers. As economic indicators stabilize, lending guidelines are becoming more relaxed.

There are a number of loans currently available that were unheard of a few months ago. Many first time home buyers are not aware of these loans and are choosing to rent instead of purchasing a home. Every day I find myself speaking with clients about the misleading information regarding what is needed to qualify for a home loan. I would like to put a few of these misconceptions to rest.

First, it is not true that you need to have a 20% down payment. There are options available that would allow you to put down as little as .5% (half of a percent). In addition it is possible to have all your closing costs paid by the seller. This means that on a purchase price of $300,000 you would be required to put down a total of $1,500. This is considerably less than the money needed to rent a home which would include; first month’s rent, a security deposit and possibly an extra deposit for a pet.

Secondly, many would be home buyers also believe that a minimum FICO score of 700 is required. This is also a myth. The truth is they can actually purchase a home with as little as 3.5% down with an FHA loan and a FICO Score of 620. Some old derogatory information and collections on credit reports may also be tolerated.

The last misconception is about having to show proof of employment for at least 2 years. While this is true for the majority of applicants, professionals are exempt from this requirement. A teacher, engineer, doctor or lawyer for example who has just graduated from college and is newly employed can be eligible to purchase a home provided they have a job contract with their employer.

With easier lender guidelines, home prices at much lower levels since their peek in 2006 and low interest rates, this may be just the right time to purchase a home rather than using your hard earned cash to pay rent to someone else.