Nikki Carter's Blog
The single most difficulty first-time homebuyers face is being able to save up the down payment. From student loans to medical bills; wanting to start a family or live in a more expensive city; coming up with those funds keeps many potential buyers out of the market.
In fact, if you don’t have your down payment saved up yet, you probably don’t think you can buy, but a recent report called the Realtors Confidence Index Survey Report claims that over eighty percent of first-time homebuying transactions take place with less than the common twenty-percent down payment.
Thankfully, there are programs out there just for you. These grants and funds may be just the boost you need.
If you’re interested in living in an area designated as rural, you may qualify for a home loan using a program set up by the Department of Agriculture. The USDA loans help low- and moderate-income buyers purchase homes in rural areas. While a down payment isn’t required, buyers must meet income eligibility requirements. They also must agree to live in the house as their primary residence. Specific addresses apply for these loan guarantees, so if you’re already looking at a rural home, double check the location to see if it qualifies.
National Homebuyers Fund
This non-profit corporation helps potential homebuyers with their down payment grants and closing costs, mortgage credits, energy efficiency financing, and other programs. To take advantage of these programs, the buyer must also qualify for FHA, VA, USDA, or conventional loans and be a low-to-moderate income earner. The program does not require that the buyer be a first-time homeowner so former homeowners who are looking to re-enter the market may qualify. Also, it’s FICO score and debt-to-income ratios are flexible.
HUD Neighbor Next Door
Purchasing a home through this program works to encourage buying in areas selected for renewal or revitalization. It provides funds for teachers, firefighters, law enforcement, and emergency medical technicians to purchase in these neighborhoods. This incentive is substantial, with up to fifty-percent reduction in the list price of an eligible home via a bid-selection process.
If you’re interested in the HUD program and qualify in one of the public servant categories, contact a HUD-registered real estate broker for assistance. Or, contact your neighborhood real estate professional and ask about local programs in your area.
Filling out a mortgage application may prove to be a long, arduous process, particularly for those who are buying a house for the first time. Lucky for you, we're here to help you dot the I's and cross the T's on your mortgage application to ensure you can quickly and effortlessly acquire your dream house.
Now, let's take a look at three tips to help you prepare your mortgage application.
1. Be Diligent
A mortgage application may appear daunting at first. The application may include several pages of questions, and you may have only a limited amount of time to finalize your submission.
When it comes to completing a mortgage application, it generally pays to be diligent. If you answer each mortgage application question to the best of your ability, you likely will have no trouble moving forward with your home purchase.
2. Avoid Guessing
If you're uncertain about how to respond to certain mortgage application questions, there is no need to guess. Instead, search for the information that you need to provide a comprehensive response. This will help reduce the risk of encountering potential problems down the line that otherwise could slow down your home acquisition.
Remember, guessing on a mortgage application probably won't do you or your lender any favors. But if you allocate the necessary time and resources to understand mortgage application questions and provide thoughtful responses, you can minimize the risk of application errors.
3. Ask Questions
Completing a mortgage application sometimes can be tricky. Fortunately, a lender employs mortgage specialists who are happy to respond to your application concerns or questions at any time.
If you're unsure about information that is requested on a mortgage application, don't hesitate to reach out to a lender's mortgage specialists for help. These specialists possess extensive mortgage expertise and can help you complete a mortgage application.
Furthermore, mortgage specialists can offer insights into a wide array of mortgage options. These specialists can explain the differences between fixed- and adjustable-rate mortgages and enable you to select the right mortgage option based on your financial situation.
As you prepare to buy a house, you may want to consult with a real estate agent as well. In fact, with a real estate agent at your side, you can seamlessly navigate the homebuying process.
A real estate agent understands exactly what it takes to acquire a house, regardless of the finances at your disposal. This housing market professional can set up home showings, help you submit offers on houses and ensure you can purchase a residence that matches or exceeds your expectations. And if you need help getting a mortgage, a real estate agent may even be able to connect you with the top lenders in your city or town.
Ready to move forward in the homebuying journey? Use the aforementioned tips, and you can finalize a mortgage application and secure the financing that you need to acquire your ideal residence.
For those who want to acquire a house, it helps to get your finances in order. That way, you can quickly and effortlessly navigate the homebuying journey without having to worry about how you'll afford your dream house.
There are many quick, easy ways to straighten out your finances before you embark on the homebuying journey, such as:
1. Assess Your Credit Score
Your credit score ultimately can play a major role in your ability to secure a great mortgage. If you understand your credit score, you may be able to find ways to improve it prior to conducting a home search.
It is important to remember that you are entitled to a free copy of your credit report annually from each of the credit reporting agencies (Equifax, Experian and TransUnion). Request a free copy of your credit report today, and you can take the first step to evaluate your credit score.
If you find that your credit score is low, there is no need to worry. You can always pay off outstanding debt to improve your credit score over time.
Also, if you identify any errors on your credit report, you'll want to address these mistakes immediately. In this scenario, you should contact the agency that provided the report to ensure any necessary corrections can be made.
2. Look Closely at Your Monthly Expenses
When it comes to buying a house, it generally helps to have sufficient funds for a down payment. The down payment on a house may fall between 5 and 20 percent of a home's sale price, so you'll want to have enough money available to cover this total for your dream residence.
If you evaluate your monthly expenses, you may be able to find ways to save money for a down payment on a house.
For example, it may be beneficial to cut out cable TV for the time being and use the money that you save toward a home down payment. Or, if your dine out frequently, cooking at home may prove to be a substantial money-saver that could help you speed up the process of saving for a down payment.
3. Get Pre-Approved for a Mortgage
With pre-approval for a mortgage, you can enter the housing market with a budget in hand. Then, you'll be better equipped than ever before to narrow your search to houses that fall within your price range.
To get pre-approved for a mortgage, you'll want to meet with banks and credit unions. These financial institutions can teach you about different mortgage options and help you assess all of the options at your disposal.
Furthermore, don't hesitate to ask banks and credit unions about how different types of mortgages work. This will enable you to gain the insights that you need to make an informed decision about a mortgage based on your financial situation.
If you need extra help as you prepare to pursue a house, you may want to hire a real estate agent as well. In fact, a real estate agent can help you find a high-quality house at a budget-friendly price in no time at all.
Buying a home will likely be one of the largest financial decisions you will make in your lifetime. While this may seem scary at first, it’s worth noting that buying a home can also be a valuable financial investment.
When it comes to preparing to buy a home, many people just wait until they run out of room in their apartment before deciding that they need to upgrade to a home. A better approach, however, would be to start planning for your first home a year or more in advance.
Saving for a down payment is a vital step to making the best long-term financial decision. A larger down payment can help you pay off your home sooner, pay thousands or tens of thousands less in interest, and start using your home equity as an asset.
But, saving for a down payment is easier said than done. So, in this post, we’re going to talk about some of the ways you can aggressively save for a down payment so that, when the time comes, you can achieve long-term financial security from your investment.
Setting your savings goals
The first thing you should be thinking about when saving for a down payment is what your goals are in a home. Setting realistic goals in this phase will make saving for your down payment more feasible and less discouraging.
Think about what you really need from a home at this point in your life and compromise where you can.
Remember that on top of your monthly mortgage payments, you’ll likely also be paying for taxes, insurance, utilities, homeowners association fees, and more.
Save on a timeline
When setting your savings goal, make sure you’re aware of the timeframe you’re working with. If you want to buy a home next year, you’ll need to focus on short-term savings options. However, if you’re okay with renting for the next 5 years, investing your money could be a better option.
Lock away your savings
Treat your down payment savings like an emergency fund. Open a separate account, automatically deposit a portion of your pay into the account, and never withdraw from it. To do this, you will, of course, need to already have an emergency fund with a month’s expenses in it.
However, once you’ve established your emergency fund, start immediately depositing into your savings account.
Pay off credit cards
It may seem like saving for a down payment is more pressing than paying off old debt. However, the numbers will show that making interest payments on your credit cards is essentially throwing away money that could have been used toward your down payment savings.
Adjust your spending habits
While it isn’t easy to start spending less once you’ve built a standard of living, there are ways to spend less money and still lead a fulfilling life. Think about where your money goes each month, including bills and services you might pay for.
Now could be the best time to cut the cord and start using a service like Hulu to save $50 or more each month.
Time for a raise?
If it’s been some time since your last pay raise, now could be an ideal time to speak with your employer. To improve your chances of success, don’t discuss reasons outside of work that might be influencing your decision to ask for a raise (such as saving for a down payment). Rather, back up your request with evidence of your accomplishments at work.
The U.S. Department of Agriculture (USDA) offers multiple housing assistance programs for people hoping to achieve home ownership.
In spite of being offered by the USDA, you don’t need to be a farmer or rancher of any kind to qualify for a home loan. Similarly, you don’t have to buy a home miles from civilization--many popular, thickly-settled suburbs across the country also qualify for USDA programs.
In this article, we’re going to explain the different programs offered by the USDA, how to check your eligibility, how to find out which locations qualify, and how to get started with a loan.
USDA Assistance Programs
The USDA offers two types of home loans for prospective buyers. The direct program, or Section 502 Direct Loan Program, is designed to help low-income persons to acquire safe, affordable housing. The assistance for this loan comes in the form of a subsidy that can be applied directly to the applicant’s mortgage, reducing monthly mortgage payments for a certain period of time.
Another type of home loan offered by the USDA is the Single Family Home Guarantee. Much like an FHA or first-time homeowner’s loan, this type of mortgage is insured by the government. As a result, buyers can often qualify for lower interest rates and smaller down payments from their lenders.
Guarantees may be applied towards the purchase, rebuilding, or building of a rural home as an incentive to developing rural areas. Later, we’ll talk about what is considered “rural.”
Outside of help with buying homes, the USDA also provides grants and loans for repairing and modernizing rural homes.
Who is eligible for USDA mortgage assistance?
In general, those applying for USDA assistance must meet certain criteria. Applicants must meet income eligibility, be a U.S. citizen or qualified noncitizen, and must purchase a qualifying property.
For the Direct loan program, applicants must be without safe or sanitary housing and be unable to secure housing through other means. Whereas for USDA guaranteed loans, applicants need only fall under the maximum income limit.
To find out if you’re eligible immediately, fill out an eligibility form from the USDA.
How do I know which houses qualify?
Generally speaking, homes located within large, metropolitan cities won’t qualify for USDA loans. However, suburbs just outside of some larger cities often do. For example, towns located just a half hour’s drive outside of Boston have a good chance of being eligible.
To view the map of property eligibility, simply fill out the online eligibility form.
How Do I Get Started?
If you’re seeking a direct loan, you’ll have to contact your local Rural Development office. Applications for a direct loan are accepted year-round and are awarded based on funding availability.
For people looking for a private loan guaranteed by the USDA, applicants should contact an approved lender in the area. The lender will then work with the USDA loan specialist in your state.