Nearly 65% of all U.S. residents own their home. Millions of people across the country have the deed to their properties or they are paying off a mortgage to secure ownership. There are different ways that first time home buyers can finance their home. Those different finance options are listed in the information below. First time home buyers can decide which finance option will work best for them and their financial situation.
Home Buying Basics and Personal Finances
When it comes to purchasing a home, people should have their finances in order. First, buyers will have to figure out what they can afford. Secondly, they will need to get their credit information in the best possible situation. Then, they will need to have enough savings to cover the down payment, closing costs and other fees associated with buying a new home.
The down payment should be at least 3.5% with a qualifying home loan. However, a basic 20% rate for purchasing a new home should be the goal for most people. A person’s income should be at least 3 times higher than that of their expected mortgage. Finally, first time buyers should choose a lender that will give them the best loan possible.
Housing Loans for Buyers
There are different types of housing loans. Each type has its own strengths and weaknesses. First up is the FHA or Federal Housing Administration loan. It has been stated that this type of loan protects lenders in case you default on your mortgage. FHA loans have competitive interest rates, lower closing costs and smaller down payments. They are a great choice for people with poor credit. Buyers in Texas who are looking for homes for sale in Fort Worth can use an FHA loan to secure a property.
USDA Loans for Homebuyers
Most people are not aware that the United States Department of Agriculture (USDA) provides loans for home buyers. Most people associate the USDA with farming and food and not housing. This type of loan might not require a down payment, but the loan rates are fixed. People with a credit score of 640 and below will probably have to provide more documentation for their payment history.
VA Loans for Military Personnel
Various members of the military industry are usually eligible for a VA loan. VA stands for Veteran’s Administration. These types of loans are geared toward active duty members, surviving spouses and veterans who once served in active duty. You can avoid the qualifying credit score to get good rates and forego the private mortgage insurance. VA loans are solid because the VA pays for half the cost of a loan. If a VA approved borrower is about to default on their loan, the VA will step in to renegotiate the terms.
Other Type of Loans for Home Buyers
Good Neighbor Next Door program is another great loan. It serves individuals that work as firefighters, police officers, emergency medical technicians and K-12 teachers. This loan will allow individuals who work in these fields to receive a 50% discount of a home’s listed price in revitalized neighborhoods. Fannie Mae and Freddie Mac based loans are designed for low to moderate income individuals.
These two types of loans can provide low down payment costs of 3% and competitive interest rates. Individuals will have to complete a Homepath Buyer Ready program. There is even an FHA Section (203) k program that will provide money to buyers to fix up a residence. The borrowed funds will be added to the cost of the mortgage. All these different finance options can help just about anyone to own a piece of property.