5 Best Tips For Financing Your First Home
Are You Eligible To Buy A House?!
The desire of financing your first home doesn’t happen to everyone, but when it does, the first thing you will need is financing.
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Buying a home isn’t for everyone, and not everyone believes that a mortgage and a roof give you the security that you think it does.
However, there are many ways that you can get yourself in the right position to buy a home.
It cannot be stressed enough that you have squared away all of your other debts before you begin applying for mortgages.
Or that you have everything paid up to date, and any defaults or issues dealt with.
Lenders like to see a ratio where there is less than 50% debt and a score over 620.
There are some occasions where it is possible to forgo any formal lending and work with the seller directly.
In this case, you will pay the seller directly for the mortgage.
It should be kept in mind that seller financing is often at a higher interest rate, and you will need a much larger than average down payment or a balloon payment.
You will need to have a lawyer to draw up all of the terms, and most often, defaults for the buyer will have big consequences.
Rent To Own
There are many schemes that offer a rent-to-own option, and in this case, you will pay down a small portion of the mortgage and the rent at the same time.
The longer you stay, the higher the monthly payment percentage will go towards the mortgage and less to the rent.
To be able to negotiate this type of deal, you will often be asked for up to 7% of the value of the home as a deposit and agree to a tiered payment plan.
Sometimes even if you don’t qualify for a regular mortgage, you can apply for some government-issued loans.
These include secure loans backed by the USDA, Veteran Affairs, and the FHA. Homebuyer programs with reduced rates, tax credits, down payment aid, and closing cost assistance are also available from state and municipal governments.
For anything that the government might back, you will need a credit score of at least 500 and offer all of the documentation that you need.
Most people opt for a regular mortgage loan, although there are some variations like a jumbo loan.
Most of the time, unless you have a great credit score and can put down a sizable down payment, you will be hit with a lot of fees and other out-of-pocket costs.
However, the bonus is that because they are so common, the borrowing costs over the life of the loan can be very friendly.
No matter which option you choose to buy your first house, there is one thing that they all have in common, ahead of any applications or discussions, you should make sure that you have saved as much as you can.
For all the best tips and advice on saving money, check out the rest of the savings posts: SAVE MONEY.