Tips for Financing the Perfect Home
Finding the perfect home can feel like an uphill battle. But when you stumble across that perfect window-to-wall ratio or that breakfast nook begging to be used, the struggle almost seems worth it. Until you see the price tag. Buying a home can be stressful, especially for first-time homebuyers. But should a price tag really be worth giving up your dream?
Before you walk away, here are a few tips that might just make your budget and your family happy:
- Know Your Score
Being aware of your credit score can help make the loan process much easier, especially for first-time homebuyers. Depending on your score, you may qualify for better interest rates or a lower down payment.
- Compare your loan options
There are many mortgage options available to home buyers. Individuals should be sure to explore and compare the pros and cons of each option. If you find yourself struggling with a down payment, check out the following loans:
- FHA Loans: Loans are insured by the Federal Housing Administration and designed for low-to-moderate income borrowers. If qualified, individuals can pay as little as 3.5% down on a house.
- VA Loans: VA loans are guaranteed by the Department of Veterans Affairs and sometimes can require no down payment at all.
- Compare Lenders
Today, information is power! Comparing offers from the different lenders gives you an opportunity to see who offers the lowest closing costs or be able to ask lenders to match low closing costs offered elsewhere.
- Evaluate the Loan Estimate
It should go without saying, always be sure to read the small print. Sit down with a representative and go through each item and question what each fee covers (not to mention, why it costs that much). You might just find yourself catching duplicated or “padded” fees. For example, processing fees and underwriting fees are the same processes which means you’re paying twice for the same thing.
- Apply for State and Local Assistance
Many states have assistance programs, especially for first-time homebuyers. These programs can offer down payment assistance, closing cost assistance, tax credits or access to discounted interest rates. It never hurts to see what your state might have to offer.
- Negotiate with the Seller
Negotiating is still a valuable skill when it comes to purchasing a home. With a little bit of practice, you might just be able to swing the house of your dreams into your budget. Make the time to arrange a meeting to discuss costs with the seller either one-on-one or through the Realtor’s agency. Some sellers may be willing to cover some of the closing costs or the cost of some repairs (roof, trimming, carpet replacing, etc.).
Don’t feel discouraged! First-time homebuyers should not give up if one deal does not pan out for them. If your dream home slips through your fingers, reevaluate your process to see what could be improved for the next time. This could mean adding more towards the down payment or improving your score for a better loan offer. By practicing, studying and learning the home-buying process, the ideal home could be right around the corner!