At some point in every adult’s life the monthly rent payments begin to get old, and they start to toy with the idea of owning their own house. However, if you are considering taking this step, remember that the responsibility of a homeowner is much greater than that of someone who merely rents an apartment. The care and maintenance of your living space will be up to you. Plumbing, air conditioning, yard work, you’ll be responsible for it all.
However, the first difficult step you will have to take is finding the money to buy your house in the first place. Barring winning the lottery or inheriting a fortune, you will have to take out a loan in order to buy your house, and that can be very complicated. There are many different types of loans, from 100% financing loans, which don’t require a down payment, to Government loans for qualifying applications, to conventional loans which require a hefty down payment. Here are a few tips to help you successfully transact this tricky bit of financial business.
The most popular loan, the one which most people think of when they think of getting the loan, is a conventional loan. This loan, however, may not be the best loan out there. In order to get a conventional loan, the borrower must have good credit and make a down payment of at least 3%, which could easily end up being a large amount of money. On a $100 000 house, for example, the down payment would be $3000. In addition, there are any number of things which could appear on your credit report that would prevent you from being able to apply for this loan. There are, however, a number of other options.
A couple of the more accepted alternative home loan programs are 100% financing and government loans. One-hundred-percent financing loans are obtainable through the VA, FHA and conventional ways.
In terms of the government, the Veteran’s Administration (VA) and the Federal Housing Authority (FHA) both offer 100% financing loans. This means that a prospective buyer doesn’t need to come up with a pricey down payment, but as these loans are considered high risk, you will get stuck with a higher interest rate.
These are just a few of the options available to you. If you continue with your loan research you will see there are myriad other types and sub-types. For example:
If you have good credit but no verifiable income there is a type of loan known as a no income verification loan. Similarly, if your credit is less than perfect, you might consider researching imperfect credit loans, which might allow you to qualify for lower, more competitive interest rates. If you are interested in the amount of money you can reasonably afford to spend on a house, pre-approval programs allow you to do this, even before you have picked out a property. There are also programs specifically targeted to first time homebuyers, as these programs are tailored to prospective buyers with good credit but without a long credit history. Additionally there are loans for new construction which get a fixed interest rate when the home is being constructed, and keeping this loan after purchase. Note: This is only advantageous if interest rates go up after you lock in a rate.
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