First Time Homebuyer Information & Education
What you need to know to buy your first home
What you need to know to buy your first home - Many people have a bit of fear when attempting something for the first time. A good example of this is the purchase of a home. The average consumer knows very little regarding the home purchase process. Between finding the right home, getting it inspected and finding the best financing, it is no wonder that some people are afraid to purchase a home.
To alleviate the stress of buying a home, consider the long term ramifications such as the tax benefits and equity you'll gain through appreciation.
Your first step is to find a mortgage professional that you can trust. That person will be able to preapprove you. The preapproval letter will contain the maximum purchase price, interest rate, contact information of the mortgage professional, and the date of the letter. Most preapprovals are good for 30 days. The preapproval letter is what you will need to show a realtor, before they will show you any houses.
Many first time home buyers are often confused about just what all goes into their monthly payment. Many lenders require escrow accounts to cover annual property taxes and homeowner's insurance. These costs will add to your montly payment and should be considered prior purchasing a home.
When looking to buy your first home you need to know what you want in a home. Do you need a 3 bedroom home because you have a wife and 2 children? Do you need a home that is wheel chair accessible? Do you need 2+ bathrooms because of teenage daughters? You should decide upon what you need out of your house and what functions are absolutely necessary to you and your family when looking for a home. It can be quite costly if you buy a home and then have to add an addition, remodel numerous rooms, add a bathroom, make the home wheel chair accessible, etc... after purchasing because you did not plan properly and buy a home that fit your needs.
Homeowner's insurance and Property taxes should not be overlooked when measuring your goals for homeownership. It will be important to understand these two other important aspects that will affect your monthly payments and overall cost.
Can I buy a home with no money down - Many people today are faced with the difficult challenge of trying to save money for retirement, for childrens tuition, for a home, and anything else you can think of. This is why there are now many options for consumers to purchase a home and obtain a mortgage without needing to put any money down. There are many programs out there for first time homebuyers that offer true zero down home loans and mortgages for people who are not able to save 5,10 or 20% for a down payment. You do not even need perfect credit to qualify for a no money down home loan. Contact your OH mortgage broker today to get prequalified immediately.
Many mortgage brokers have an arsenal of loan programs with "Zero Down" features. One popular such mortgage is the 80/20 piggyback program, in which the entire purchase price of the home is financed with two loans, one in the amount equal to 80% of the home price and a second mortgage making up the remainder 20%. Nowadays "No Money Down" financing is easier to achieve than ever before.
It is very important that you have good credit in order to buy a home with no money down. I did not say perfect credit but good credit. There are some no money down programs for credit scores under 600 but here is the catch. Getting 100 per cent financing with a sub 600 score will usually mean a rather high rate of interest and subsequently higher payments. Also you will be required to provide full proof of your income, often making qualifying difficult.
Although it is possible to buy a home with no money down, it will be important to remember most purchases will require a down payment and perhaps closing costs. Although gift money is allowed, it will be important to disclose this early in your conversation with your loan consultant in order to help guide your loan application towards the right lender.
Some lenders will require 2 months cash reserves to cover the mortgage payment, taxes and insurance. This is becoming more popular in todays market as the market tightens up.
Most lenders will allow 3-6% seller concessions. This basically means that the seller will pay your closing costs for you, up to 3-6% of the purchase price. Be aware that the seller usually cannot pay ALL of your closing costs. Usually you will have to pay certain costs yourself, such as pre-paid interest or tax and insurance reserves.
Situations like this are not uncommon. If the purchase is for your primary residence, you will have an easier time getting a loan than if you were using the home for investment purposes.
Mortgage brokers have a wide variety of lending products available to them. You may not need to have outstanding credit to qualify for 100% financing.
If you are required to put money down, ask your mortgage professional if they use a down payment assistance program. Many times these programs will help you purchase a home, and grant the money to you. You are not expected to pay the money back, and it is a great way to purchase your first home. The down payment assistance program must be in the offer to purchase, so you need to tell your realtor that you are going to be using one. Your local mortgage professional can tell you if you qualify for such a program.
With the increase in property values it has become harder for average family to come up with the 20% for a down payment. This has forced lenders to become more aggresive with their loan products. It is perfectly reasonable for an average family to purchase a property with zero money down.
Information listed above is to be used for educational purposes only and is not guaranteed
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