There are a lot of considerations to keep in mind when purchasing your very first home. Apart from having enough down payment, you also need to have good credit; unfortunately, not everyone has one. Can you still get your dream home even without credit?
The answer is yes. You can still get the house you have been eyeing on in the real estate market even without credit. The means of getting it without one, however, is a very difficult one.
According to Realtor.com, first-time homebuyers without a good credit rating can purchase their dream homes by paying cash. While this sounds impossible, the publication noted that 30.1 percent of single-family home and condo purchases in 2015 were made using all-cash transactions.
Some people who pay cash to purchase a property are sometimes those with terrible credit. On the other hand, some people also do not "want to be subjected to the scrutiny of a bank ... They like to live under the radar."
Of course, there are pros and cons of paying cash to purchase your first ever home. According to the outlet, paying cash can help you save time and money. Saving up for it, however, sometimes takes more than just a year or two.
"A lot of times, with cash deals there's only one Realtor involved, so you can really negotiate down the commission," said Doris Phillips from Lake Homes Realty.
It will also save you money from the costs of taking out a mortgage such as insurance and tax, including lender's costs and underwriter's costs. Some sellers also prefer all-cash buyers, but others are put off by the thought of selling their homes to one.
"They tend to be very low-ball-oriented offers that we tend to beat our regularly," said senior loan officer for Sonoma County Mortgages Scott Sheldon.
Getting a mortgage, however, also has its benefits. According to Investopedia, there are certain tax benefits for homebuyers.
The publication stated that one can avail of the home mortgage interest deduction, which allows one to deduct their interest paid for their lender.