Building Buying Power
As the Spring months start peeking through, the home buying market is heating up! Have you been picturing the day when you can paint your own walls and mow your own grass? The dream of homeownership comes with great financial responsibility. Many first-time home buyers have questions about their down payment, and how they can start saving to make that first major purchase. We’ll discuss several organizations that are willing to help you with the financial burden and get you into your own home soon.
The process of applying for a loan can be overwhelming and stressful. Without an excess amount of funds, you may find yourself digging in couch cushions and trying to work extra hours to come up with the funds and savings to start the journey toward homeownership.
There are a few major factors that come into play when getting pre-qualified for a home loan.
- Credit Scores
- Income
- Debt
- Down payment
Paying Down Debts? │ Not Enough Left For A Down Payment?
If you have been trying to pay down debts or have been in the credit repair process, again, excess funds may be low. After your income has been reviewed by a trusted lender, more than likely you have discussed how much money you will need for a down payment. Did the amount of money sound manageable?
I spoke with Loan Originator, Steve Casterline with Neighborhood Loans recently. He explained to me a few options for clients that find themselves in a situation to where the downpayment is going to be a hurdle.
All hope is not lost! There may be help right around the corner, you just have to know where to look. Below is a list of some other options out there to possibly help jump-start the home buying process for you.
Down Payment Assistance Programs
For down payment assistance, there may be a household income limit or a limit on the purchase price. Look in the area where you are hoping to purchase. There are some cities that will also contribute and help with down payment assistance. Since Steve is a Loan Originator in Missouri, he mentioned the Missouri Housing Development Commission (MHDC) as a good resource for assistance. But most states have their same version of this program.
Talk to your lender further about what programs they may know of in the area in order to help you with funds. If you are a first-time home buyer, there may be a program for you! Hoping to buy a home in a historic district? There are grants for homes in certain areas of towns where they would like to see the homes restored and rehabbed too.
USDA
This is a loan that Steve says is quite possibly the best option out there. And from what I read, I believe it. Most of these loans don’t require a minimum credit score, there is Zero dollar down payment, and there could be some income eligibility requirements. For those who enjoy living in the city, this is not the right program for you. These loans are for rural areas only.
Chenoa Fund
For those who can’t imagine themselves in a rural setting, there is a great tool for downpayment assistance with the Chenoa Fund. Steve offered this info to me as something he utilizes quite frequently. This option is for FHA Loans that requires around a 640 credit score. It can help cover the cost with downpayment assistance from anywhere to 3.5% and 5%. The great thing about this program is the fact that it’s nationwide. Ask your lender to see if this may a be a good option for you.
VA Home loans
For those who have served our country can reap the benefits of VA Home Loan. There are some really nice advantages to this product. Generally there is no downpayment required. The interest rates are very competitive with limited closing costs. And no Private Mortgage Insurance (PMI) is required.
Ready For Home Ownership?
Throughout the home buying process, there will be so many new things to learn as you become a homeowner.
A few things to start doing in order to take the next step in the process are:
Shop Around For The Best Mortgage
If you are ready to take on home ownership, start looking around at lenders in your area. Consider the pros and cons of a bank, credit union, online lender or mortgage broker.
Apply
Your credit will be pulled at this point by the lender you are using. When you have decided on the best option you will need several documents like your paystub, recent bank statements and tax return documents. There will be many different types of documents that dive deep into your finances. Remember to hold off on applying for new credit, buying a new car or making large purchases before you close!
This can really hurt your credit scores and may cause an issue for your home purchase. If your lender cannot get you pre-approved with your credit scores they may refer you to a credit repair company so that you can work on your scores. Some credit repair companies work with you as quick as they can to get your scores up so you can get back to the lender as soon as possible!
Pre Approval
Once you complete the application, your lender will decide based on the documents you provided. At this point, the lender will let you know how much they are willing to loan. This document is typically good for 60-90 days.
START SHOPPING!
Now is the time to grab your agent and start checking out all the open houses and find your dream home!
MAKE AN OFFER
Once you find the house you are looking for, your agent will write a contract up and have you sign the purchase agreement.
As you move forward with your home purchase there will be loads of paperwork and numbers thrown at you. Your lender will be your guide throughout the process and will keep you updated on documents they need in order to get your file closed on time. Talk with friends, your agent, and family about lenders they have used. The home buying process is one that can be stressful, but with the right guide, it can be exciting too!
