Buying a home can be one of the most exciting and nerve-racking experiences in any person’s life. Since homeownership is a major commitment and investment, it’s important to have some basic knowledge of your finances, lending options, and housing choices before signing a contract. Below are four things you should know before buying your first home.
Your Credit Scores
Know your credit scores and reports and clear up any inaccuracies or bad debts before applying for a loan. You are entitled to one free credit report from each credit bureau each year from annualcreditreport.com. Check out other options for lending as well. You might have more alternatives than you think.
Your Lending Options
Several programs offer favorable terms to people buying their first home. For example, the FHA first-time homebuyer program allows homebuyers to purchase a home with his little as a 3.5 percent down payment. Ask a housing counselor or mortgage lender about the VA, USDA, or Good Neighbor Next Door mortgage programs.
Options for Help with Closing Costs, Down Payments, and Repairs
The cost of buying a home is significant and is almost always more than you planned for. Financial help may be available to assist with closing costs, making a down payment, or having repairs done on a home that needs a bit of TLC. For example, if you are willing to put some serious sweat equity into updating and repairing a home, you may be eligible for HUD 203(k) Loans that provide you with the cash needed to make repairs. If you require help with closing costs or saving up for a down payment, charities and local government programs may be able to help. Talk to a housing counselor, a mortgage lender, or your city’s housing authority to find out about whether you qualify for this type of assistance.
Do some research on the different communities in the area where you’d like to live. The cost of housing in a particular neighborhood may be significantly lower than in a nearby community. There may be good reasons for this decrease in housing costs, including crime, poor schools, or transportation issues, but it often pays to investigate the pros and cons of living in each area.
If all this seems overwhelming, there is help available. The United States Department of Housing and Urban Development certifies housing counselors who offer free and low-cost information to homebuyers. In addition, organizations in your community may offer seminars on home buying that are open to all. Take advantage of these educational options so that you can confidently make the transition from renter to owner.
About the author: Eileen O’Shanassy is a freelance writer and blogger based out of Flagstaff, AZ. She writes on a variety of topics and loves to research and write. She enjoys baking, biking, and kayaking. Check out her Twitter @eileenoshanassy. Succeed At Eagle has more information on loans for mortgages here as well.