If you are looking to buy your first house, then there are a few things you need to remember. You can find the perfect home for you and your family without waiting until the market is flooded or you need a perfect credit score.
20% Down Payment
A common misconception is that you need to have a 20 percent down payment to buy a home. But that is not true. You can buy a house with as little as 3% down.
There are many programs available to help you finance your down payment. These include FHA, VA and USDA. The latter can provide 100% financing. Those with a large down payment may also qualify for a lower mortgage rate, which means a smaller monthly payment.
Home prices have been climbing at a record pace in recent years. This increased demand has added equity to the housing market. Some buyers have been able to take advantage of this and build their home equity.
However, saving for a down payment can take years. You can free up cash for your down payment by putting money into an emergency fund. Another way to increase your savings is to eliminate your credit card debt. Credit card debt is the leading form of consumer debt.
You can buy a home with a 5% deposit
If you’re in the market for a new home, you may be considering a 5% deposit home loan. This is a great option for first time buyers as it gives them a good chance of buying a house that is within their budget. However, there are some drawbacks to taking out a mortgage with a small deposit.
The best part about the 5% deposit home loan is that it allows you to buy any house you want. In fact, you can purchase a home for as little as $850,000. To put this in perspective, that’s a whopping $40k to save up for.
Although you can get a mortgage with a 5% deposit, you’ll probably have to spend a lot more than that. For instance, you might have to pay lenders mortgage insurance. Additionally, you will likely have to pay a higher interest rate. You’ll also have to consider the potential for future house price hikes.
In the past few years, the property buying process has undergone a sea change due to the recession. Consequently, lenders are more reluctant to lend to borrowers with small deposits. However, there are some lenders that are willing to make the odd exception. Using the services of a mortgage broker can help you find the right lender for you. A good agent should be able to provide you with a list of options and keep you informed every few months.
You don’t have to be a millennial
If you are a millennial looking to buy your first house, you should be aware of some of the issues you may face in the housing market. The good news is that there are many steps you can take to help you navigate the process.
First, you should know how to build a solid credit history. Having a strong credit history will increase your chances of getting a home loan. It is also a good idea to save for a down payment.
You may have heard that home prices have risen over the last two years. That is true, but not only do you have to have a good credit history, you should also have a down payment saved. Some millennials may be stuck in the rent-to-buy cycle. This is because they are unable to save for a down payment.
Millennials are also burdened with student debt. Student loans can affect your DTI, which can make it difficult to qualify for a home loan. In addition, if you have a high debt load, you may be unable to afford the mortgage payment.
You don’t have to wait until prices go up
You don’t have to be a first time home buyer to take a page out of the housing loan book. With interest rates nearing a ten year high, it is time to reevaluate your life choices and your financial portfolio. There are many facets of a healthy life to consider, like family, job and retirement, and how to best allocate your hard earned cash.
The following are some of the more relevant items for your consideration. Having a clear mind and a clear pocketbook will go a long way in ensuring a smoother path to the good life. Getting a home loan or refinancing a mortgage can be a nightmare. For starters, you need to take steps to ensure your credit scores are up to par and that your credit limits are in line with your long term plans.
You don’t have to have a perfect credit score
A credit score is one of the key components to your home mortgage, but it is not the only thing that will get you approved. Lenders are looking for borrowers who can afford to make payments on time and those who have demonstrated their ability to handle financial obligations in the past. This is the reason why you don’t have to have a perfect credit rating to qualify for a home loan. However, there are a few things you need to know before you go to town.
The best way to determine which lenders are in your price range is to visit your local realtor. While you are at it, take note of which lenders require a high credit score. You can avoid unpleasant surprises by learning about their lending requirements before you set foot in the door.
In a nutshell, you need a credit score of at least 620 to buy a house. If you can, save up for a bigger down payment. Your interest rate is also up for grabs, but with a good credit score, you can enjoy lower rates and a less daunting loan process. It’s all about planning ahead, especially if you plan on purchasing a home in the near future.