SPOKANE, Wash. – First-time home buyers are struggling to break into the housing market.
Nationally, nearly 2 million potential buyers are expected to be assessed this year, according to the National Association of Realtors.
NAR says that’s about 10% of local families.
Credit scores are critical in this tight housing market, especially for first-time home buyers.
The higher you can get this number, the more competitive you will be.
Local loan officer Jared Wash says 680 is a good starting point, but 720 will get you better interest rates. A local family was approaching a decent credit score before COVID-19 hit. Today, their reality is very different.
The Keifers are a family of four crammed into a hotel room for lodging. During the shutdowns, they both lost their jobs and started to make ends meet by paying their bills with credit cards.
Before COVID, they were trying to raise their credit score by about 20 points – to around 630 – so they could buy a house.
Now they’re just trying to get out of a hole with a broken credit score that’s now in the 400s.
“Right now, with how much we’re paying for hotel, for transportation, for all that stuff, we might be able to pay one unpaid bill a month. At this rate, we’ll never be able to get our credit score anywhere,” James Keifer said. “We’re paying the amount most people would pay for a house payment here.”
They pay around $2,400 a month for two beds and a kitchen. What keeps them there is a low credit score.
At Wheatland Bank, Jared Wash meets people every day who want to buy a home but can’t.
“I see a lot of people who during this time had to put a lot of money on their credit cards, so they steadily saw their credit score drop,” he added.
That’s what the Kiefers did when they lost their jobs, and they’re still paying it today.
“Without being able to pay outstanding bills that are being collected, we have no ability to move forward,” added James.
The first step to moving forward is to establish a plan for increasing credit by paying off credit cards and paying your bills on time.
“These late payments have very negative effects on your scores,” Wash said.
He says if families stay committed to these plans, it will take about three to six months to see your credit score start to improve.
At this point, the Kiefers aren’t close to homeownership, but they’re working on it.
“I would give a kidney to give my kids a room,” James said.
Credit cards can be dangerous, but Wash says they’re still necessary to build your credit score and help you qualify for a mortgage. He suggests making small purchases each month and making sure you pay them back. There are also down payment assistance programs to help first-time home buyers.
If you don’t have tens of thousands in savings, a local loan officer can help you find other ways to pay the bill.
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