Are you getting ready to buy your first home? There are a lot of options when it comes to new home financing. Here are a few to consider.
Are you looking to buy a home for the first time?
Becoming a homeowner is a huge step to take in life and every precaution should be taken to make sure that your home buying experience goes off without a hitch.
The first thing that needs considering is your finances. If you haven't figured it out yet, purchasing a home is very expensive and unless you're wealthy, you'll probably need help financing the purchase.
Here, we'll give you 5 tips on how to go about financing your first home. New home financing can be a confusing and tricky process, but we're here to help.
1. Be Realistic About What You Can Afford
It's important, when buying your first home, that you have full knowledge of what you'll be paying on a monthly basis. You'll pay the monthly principal and interest, but you might also pay into escrows for property taxes, hazard insurance, and a homeowners assessment.
Don't let yourself be talked into paying more than you're comfortable with. Using online mortgage calculators can be a really helpful way to get a general number based on interest rates and down payment amounts.
2. Get Rid of Your Debts
When you're applying for a loan, you need to be able to show the lender that you're financially responsible. Large amounts of credit card debt can be a very bad look for you when applying for a loan.
Most lenders will want to see a debt service ratio of less than 40% of your monthly income before giving you a hefty sum of cash.
3. Home Buyer Resources
As a first time home buyer, it's important to know that you don't know everything. Attending a first time home buying seminar can give you a lot of good unbiased advice that will help with making an informed decision on financing.
We say "unbiased" because it's easy to be influenced one way or another by those establishments that may have a financial interest in which loan you take or which home you buy.
4. Government Resources
Your government actually offers many resources to help get you on your feet. The department of housing and urban development (HUD) offers free housing counseling and seminars. If you view the FAQ section of the HUD's page, you'll find links to answers for common questions posed by home buyers.
5. Types of New Home Financing
Once you've educated yourself, you can make the big decision on how to finance your new home.
The most well-known home loan is a mortgage. With these, you pay off the interest and then the principal, monthly, over a set period of time; usually 20 to 30 years. You select the time frame, say 30 years, and then your monthlies are calculated so that you'll pay the mortgage off in that amount of time.
There are, however, other types of home loans that you can get. FHA loans are part of a home buying incentive program set up by the HUD. These have an easier qualification process, a smaller down payment, and are lower cost. Each state has specific FHA requirements.
It's important to get the best loan for you and your needs. Do your research into FHA loans, mortgages, mobile home loans, and VA home loans and pick the one that you feel makes the most sense.
Get the Ball Rolling
Home ownership is a big deal and it's important that you get the best loan for your needs that also doesn't debilitate you financially.
We gave you a few crucial tips on how to begin on the road of new home financing, but there's a lot of additional research that you'll need to do. Take what you've learned here and go find the best financing option that you can.
For assistance with paying a loan, mortgage, or lowering your debt, visit Easy Finance.