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The real estate market is seeing a significant amount of activity as buyers take advantage of low interest rates, robust inventories and excellent prices.

First-time homebuyers realize that mortgage payments, including taxes and insurance, are on par or even less than what they were paying for rent.

The key to buying a home is to have good credit. As we have written about in the past, credit scores can range from 300 to 800. Most banks and credit unions require a score of 620 or more, with higher scores qualifying for more mortgage programs.

To keep your credit score strong, pay your bills on time and don’t max out your credit cards or other lines of credit. If you are purchasing a home with another person, the lender will use the score of the borrower with the lowest middle score from the three major credit bureaus.

There are a variety of programs still available, including a 100 percent financing option offered through USDA’s office of Rural Development. In addition, the Federal Housing Authority has a program that will finance a home with as little as a 3.5 percent downpayment. Massachusetts Housing Finance Agency (MHFA) also offers a variety of low down payment options with no PMI.

There are some caveats: the borrower must have a minimum investment of $1,000 and participate in a homebuyer-counseling program.

Finally, the lender wants to ensure you don’t financially overextend yourself. The general rule of thumb is that your total debt-to-income ratio can’t exceed 41 percent. Simply total all your monthly payments for any type of debt, such as car payments, student loans, credit cards, and factor in your new monthly mortgage payment.

The very first step to home ownership is to save money not only for a down payment, but maintenance and emergency repairs and at least three months of living expenses. In addition, you’ll want to obtain a copy of your credit report, which our credit union will run for free and provide tips on how to improve your score.

The Twin Cities Community Development Corporation and Greater Gardner Community Development Corporation are a great resource for first-time home buyers, with their home buyer counseling programs and other informative workshops.

With a little planning, the American Dream of home ownership is still obtainable.


vice president, residential mortgage manager

Workers’ Credit Union

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