So you are finally ready to buy a home, but you have a lot of questions and you are feeling a bit overwhelmed with the many different financing options that are available. Trying to figure out how much you afford and which is the best way to go about financing can be a daunting task, especially if you do not have all of the proper information. Fortunately, we have an abundance of advice waiting to be shared with you. We hope to help by providing financial information best suited to your needs, taking that burden off your shoulders so you can be on your way to buying a house without trepidation.
There are many types of mortgage loans which are differentiated by the structure of the loan, and which agency secures it for you.
A conventional loan refers to a fixed-rate mortgage or adjustable-rate mortgage that is not insured or guaranteed by the federal government. They are the most difficult loan to qualify for because of the requirements such as credit score, down payment, and income. The terms of conventional or conforming mortgages must adhere to the guidelines set by Fannie Mae or Freddie Mac organizations.
An FHA loan, insured by the Federal Housing Administration, is a part of the U.S. Department of Housing and Urban Development. They provide various mortgage loan options. These are recommended loans for first-time home buyers because the credit requirements are more lenient and there are lower upfront loan costs.
A VA loan is a mortgage loan that is guaranteed by the U.S. Department of Veteran Affairs(VA). The VA itself does not issue the loan but guarantees the mortgage by working with qualified lenders. This allows veterans and active servicemen and women to get favorable terms on home loans, usually with no down payment required.
Factors to keep in mind when buying a house
Figure out your finances.
Securing a home loan is half of the battle. If you have the required down payment you are almost there. Now you have to be sure that you are able to repay the home loan based on the terms of your mortgage. Getting your finances in order and being sure that you can afford to meet this obligation should be priority number one.
The location is everything.
One of the biggest things that consider when you buy a house is the location. Prices tend to vary depending on where the house is located. A house closer to the city core tends to cost more, while a house in the suburbs is cheaper because of a longer commute time and being farther away from public transportation, shopping, and other amenities.
Turn-key or fixer-upper
Are you comfortable with a house that needs to be fixed up? This is another important consideration. While the savings can be great, you have to ask yourself are you handy with tools? What is the condition of the house? Were there any renovations, what kind of materials were used, in what year was the house built? If you aren’t much of a handyman or woman then consider a house that is ready to move into the second you open the door. While it will initially cost you more money, you won’t have many of the difficulties of wear and tear that will require attention sooner than later.
If you take all of these tips into consideration buying a home will be as painless as possible. You will be ready to start your new life.