There are certain obstacles that every home buyer faces when they first enter the Peoria Illinois real estate market.
These obstacles can make navigating the market a nightmare if you’re not properly prepared for them.
Continue reading to learn more about these common home-buying obstacles and how you as a Peoria home buyer can overcome them.
Investing in Peoria Real Estate
Here are some common difficulties that home buyers run into when navigating the real estate market – as well as how to overcome them:
1. Securing a Down Payment
Most home buyers will need to get a mortgage before buying a home on the Peoria real estate market.
And unless you’re a veteran who qualifies for a VA loan, you’ll likely need to provide a down payment on that mortgage.
Most home buyers will likely need to get either a FHA or convention loan, which require minimum down payments that range from 3.5 to 10 percent of the sales price.
Start saving now to ensure you’ll have that kind of money when it comes time to put down that payment for your mortgage.
2. Getting a Minimum FICO Score
Depending on whether you get an FHA or conventional loan, you’ll need to secure a certain FICO score to qualify.
Typically you’ll need at least a 620 for an FHA loan and at least a 720 for a convention loan.
If your FICO score is below those thresholds, you may not qualify for the loan you want.
To discover what your current FICO score is, ask your lender to run your credit report.
Most lenders will pull your credit score from three different sources and take the middle number.
3. Meeting Lender Ratios
Most lenders will require buyers to have a maximum 33 percent front-end ratio.
That means that your mortgage payment – plus applicable taxes and insurance (PITI) – is not more than 33 percent of your monthly gross income.
As an example, if you make $10,000 a month, you’ll qualify for a maximum mortgage payment of $3,300.
Lenders will also consider your back-end ratio, which adds your PITI payment and regular debt payments.
Most lenders want that ratio to be somewhere between 41 and 50 percent of your monthly gross income.
4. Satisfying Loan Conditions
Waiting for underwriting approval can be an uncertain time for home buyers because the underwriter may come back with more demands.
For instance, they may ask home buyers for more documentation, a review appraisal or more.
Unfortunately, if you don’t meet these demands, you may be disqualified from getting a loan.
Luckily, there are ways that home buyers can increase their chances of getting approved. Working with a seasoned Peoria REALTOR such as me, Mary Ann Knell, helps since we have extensive experience helping home buyers secure such loans.
Your Peoria Real Estate Experts
If you’re interested in a Peoria home buying experience that’s as seamless and stress-free as possible, then contact me, Mary Ann Knell.
My team of Peoria REALTORS and I will work hard to ensure you have a successful outcome on the Peoria real estate market.
In the meantime, be sure to browse some of my home buying resources online, including:
Until next time,
Mary Ann
