Buying a home is a process, but many new younger adults are taking the steps to become a homeowner. Now, is a great time to own a house with plenty of houses on the market. Closing the deal is essential but securing the financing is a very important factor for buying a new home. The right down payment can help you secure your dream home. Deciding how you will finance your new home will mean assessing your options. However, it will also be determined by the price of the home that you choose. Find a house that you love at a great asking price that you can afford into the future.
Financing Options For Buying A New Home
According to the Home Buying Institute online, FHA loans are the most popular home buying options. In fact, it’s a preferred method for first-time home buyers. Why FHA loans? Often times, people prefer FHA loans because it requires a low down payment, helps buyers with less than perfect credit, and is one of the easiest ways to secure a loan. The Federal Housing Administration (FHA) takes buyers with a score as low as 550 and only 37 percent is required as a down payment.
If you’re considering a conventional mortgage, at least 20 percent is required. Plus, they require insurance on the loan in case you go into default. Private mortgage insurance (PMI) will cost you thousands each year. However, the higher down payment will allow you to quickly secure equity in your new home. You can also save money for a down payment, but it can be very time consuming. It will take 5-10 years to save money for a new home. Plus, you should remember to factor in those PMI payments. The lower your down payment, the higher your monthly mortgage will be.
The Dollar Amount For A Down Payment On A Home Based On A $350,000 Dollar Home
- FHA Loan: @ 5 percent down $10,500 down
- Conventional Loan: @ 20 percent down $70,000 down or more
- Personal Savings: @ 30 percent down $100,000 down or more
*All prices are subject to a 30 year pay off plan
You should always factor in your credit score before you buy a home. If you’re considering a loan, this is the only way to determine the actual down payment amount. Interest rates, mortgage points, taxes, and other debt are also a factor for your down payment on a home. Ask yourself, do you have enough money for a down payment on a home? Talk to a mortgage broker for more details on your down payment home options.
To live in a home is a piece of the American Dream, but it takes work. There are a lot of deciding factors in residential residency. Plus, there are many homes on the market to choose from at this time. A lot of people are tired of renting an apartment and living the apartment lifestyle with limited space, nosy neighbors, and a less than friendly landlord. Let’s face it; the home market is an industry with possibilities, but is it better to rent a home or own one? The following user-friendly guide will help you decide if you should rent or buy.
Should I Rent Or Buy A Home
Buying a home takes responsibility and a lot of work. You have to secure financing, maintain a good credit score, and prepare for other homeowner related expenses. In fact, to secure financing you have to determine if you’re going to take out a loan or save your own money for a down payment. If you’re paying a smaller down payment, this means a higher monthly mortgage, private mortgage insurance costs, and interest rates. The home ownership market is steady declining because of the risk factors and associated costs. However, some people prefer owning a home over renting.
Renting a home is much like renting an apartment, but you have more space and a few more responsibilities. For example, if it’s not in your leasing agreement, you’ll be responsible for cutting the grass. However, like an apartment, as a home renter, you’ll have your repairs covered in your leasing agreement (check your lease for details) and the home owner will cover the cost. Can you imagine paying for a busted pipe? This is an expense that could cost you thousands of dollars in repairs including a complete air conditioner installation or a new roof. Thus, it appears that renting a house is the better alternative, but it depends solely on your circumstances.
If you can afford to own a home, it’s a great investment. In fact, it’s something you can pass on to your children, and you can build equity from your home. You can always cover the cost of your repairs with home owners insurance. Plus, you have the flexibility of missing a mortgage payment without immediately receiving an eviction notice. Renting a home is just like renting an apartment. While renting, your trading one leasing agreement for another. The choice is entirely up to you, but owning anything is always a better alternative to renting. Owning means: “What’s yours is yours and nobody can take it away from you” (except the bank if you fall to far behind on your mortgage payments).