Tips for Financing Your Next Home

Buying a home is a significant milestone, but it can also be a daunting and stressful experience, especially regarding financing. With the variety of options available to you, it might be difficult to find the right fit for your financial situation.

In this blog post, we’ve gathered some tips to help finance your next home purchase a little bit easier.

Start Saving Early

Saving for a down payment on a house can seem daunting, but starting early can significantly impact your future mortgage payments. 

According to experts, it is recommended to save at least 20% of the home's purchase price. This percentage will help you avoid Private Mortgage Insurance (PMI), which can add up to hundreds of dollars to your monthly payments. 

By saving early, you give yourself ample time to reach your goal and avoid the extra expense of PMI. 

So, whether you're just starting your career or have been working for a few years, it's essential to consider the benefits of saving early for your dream home.

Check Your Credit Score

Your credit score is a significant factor in determining your mortgage rates and eligibility. Before applying for a home loan, checking and monitoring your credit score regularly is essential. 

Settle any outstanding debts, pay your bills on time, and avoid opening new credit accounts during your mortgage application.

Shop Around for a Lender

When it comes to borrowing money, it's important to find a lender that offers favorable interest rates and loan terms. To achieve this, it's recommended to shop around and compare offers before deciding on a mortgage lender. 

By doing this, you can ensure that you get the best deal for your financial situation. So, take the time to initiate a conversation with multiple lenders, compare their offers, and get pre-approved. 

With these steps, you can feel confident in your choice and make a well-informed decision.

Consider Your Mortgage Options

When considering mortgage options, it is important to weigh the advantages and disadvantages of both fixed-rate and adjustable-rate mortgages. 

While a fixed-rate mortgage guarantees a stable payment over the life of the loan, an adjustable-rate mortgage can offer more flexibility and cost savings in the short term. However, it is crucial to carefully evaluate your budget and financial goals before deciding on a mortgage. 

While a low-rate adjustable mortgage may seem attractive at first, it is important to consider potential fluctuations in interest rates and ensure that you are comfortable with the possibility of rising payments in the future. 

Regardless of which option you choose, taking the time to research and understand your mortgage options thoroughly can help you make an informed decision that meets both your immediate and long-term financial needs.

Stay Within Your Budget

It is essential to stay within your budget when buying a home. Analyze your monthly expenses, including your mortgage, property taxes, and insurance, to make sure you are comfortable with the payments. 

Remember that owning a home comes with monthly expenses and unexpected costs like maintenance and repairs.

Final Thoughts

Financing your next home purchase is a big decision that requires careful planning and evaluation of all your options. 

Understanding the factors that affect your financing, such as your credit score, mortgage options, and budget, can help you make informed decisions. 

With these tips, we hope you feel more prepared to finance your dream home and enjoy the benefits of homeownership.

Loans and Lending: How to Get Financing for Your New Home

As the housing market gets tighter, traditional lenders may not have enough flexibility to offer you the money you need in the timeframe you need. Thankfully, there are many private borrowers and FHA alternatives that you can use to fund your house.

New or Existing?

Are you building new or buying an existing home? If you’re buying an existing home that needs some work, you may be able to get short-term lending for the initial purchase, make the repairs to bring the house up to what you need, and then qualify for a traditional mortgage. 

It’s important to be aware that the terms on short term lending can be a bit more expensive than a traditional mortgage. However, you can get the money much more quickly and those dollars will be easier to get approved than a traditional mortgage.

Get Pre-Approved

If you’re working with a realtor, get your documentation together so you can get preapproved for a mortgage with a mortgage broker and have a working idea of the dollars you can qualify for. 

Most of these pre-approvals are what is known as a “soft pull” or a loan approval that doesn’t impact your credit. While talking to the mortgage broker, be prepared to ask about first-time buyer options or down payment loans. There are programs available in some regions that allow you to

• Borrow enough to meet the down payment requirement
• Make payments for a set period of time, both the down payment loan and the mortgage
• Get the remainder of the down payment loan forgiven

Functionally, the down payment loan becomes a grant once you’ve been in the house for a particular number of months or years.

Credit Rating

For those that are planning to build, be very careful with your spending and payment habits once you’re preapproved. You want your credit rating to be as high as it was at the time of preapproval, and higher is even better. 

If you’re building, you may need to re-qualify for the loan in the event of construction delays.

It’s been a very uncertain couple of years and the housing market is very tight. If you find a neighborhood and a home that suits you well, you may have to make a couple of different applications to get fully funded for your region. Keep going so you have dollars in place when you’re ready to shop.

Building Your First Home? 4 Strategies To Handle Tricky Financing

When you build your first home, one of the things that you have to make sure that you have in order is the financing. 

If your credit score is good and you can show the income to pay the loan or mortgage off, then it's usually fairly easy to secure the financing that you need. 

It's best to make a budget of the size of the home and the work that you want and need done before applying so that you have an idea as to how much you will need to borrow.

Type Of Closing

There are basically two ways that most finance institutions will handle the closing on a new home. Most will go through a one-time closing. 

This means that the interest only loan will be approved for about six to 12 months while the home is in the process of being built. Once the home is built, it is converted to a fixed rate for 29 years. 

It's best to pay off the loan as soon as possible so that you don't wait this long. The second is a loan with two closings. There is an interest only construction loan for the building of the home and a second closing that will be refinanced once the home is built.

Qualifications

This is where you need to have the good credit scores and the income that is required to secure a loan. Most companies will look harder at a construction loan than a typical loan for purchasing a home because the collateral is not in place yet. 

Most down payments are about 20 percent. Appraisals and inspections are required before the loan is secured. 

Real Estate Agents

Sometimes, a real estate agent can help you get a lower interest rate and get through the loan process a bit faster. 

You need to get the agent to submit pictures and paperwork about the property and the intentions of the home that is to be built. This will often show that you are dedicated to the process of finishing the home and that you aren't going to back out.

Save Money

Before you secure a loan, save as much money as possible. Try to start saving about a year in advance. 

If you have a good amount of money available, you can use it to pay off a good chunk of the loan soon after its secured instead of struggling to get it paid back once the home is built.

Building your new home is an adventure. If you aren’t sure the best way to go about financing, consider working with a professional like those at Assurance Financial Group. 

You get to decide what it looks like and what it has inside. Once you jump over the financial hurdles, it's usually smooth sailing during the construction and design process.