If math frighten you, as it does many people, don’t let it deter you from the goal of home ownership.
Coming up with a down payment for the home of your dreams might seem intangible, but luckily there are more ways than one to go about it.
If you’ve begun the process as a first time homebuyer, at some point or another, you could be asked to provide a Letter of Explanation. If it sounds scary – know that it’s not.
Student loan debt is a hurdle facing many millennials as they become interested in becoming first-time homebuyers. But is it a hurdle that can’t be overcome? Here’s the skinny on student loan debt and mortgages.
The beginning of 2016 ushered in a drop of interest rates, thereby increasing the number of people eligible for refinancing, according to the housingwire.com.
Just when you thought you had this tax thing down, you decided to look into buying a home! Whether or not you pay more in federal and state taxes could make a big difference in the amount of home loan you’ll be qualified for!
After four years of living in the same apartment, and shortly after welcoming their second child, Brittany and her husband knew that it was time to start thinking about purchasing a home. “We knew that we would not be able to stay in that space for much longer,” Brittany says. “We just had limited storage space…two bedrooms and one bath.” Her family was quickly outgrowing the space.
Brittany and her husband began their mortgage journey working with another lender, and made the switch to Stockton Mortgage after they heard about our Mortgage Credit Certificate (MCC) program.
“I knew I would have to switch lenders and so I asked my realtor if he had heard anything about [the MCC] – he had not, but I had given him a list of the lending agencies and Stockton was on it and he knew Sherri Sampson.” Brittany says that her realtor assured her that while he did not know about the MCC program, Sherri Sampson would.
“She really seemed to know her stuff,” Brittany says, referring to Sherri. “I just felt more confident with her than the original person we were dealing with.”
“She very much walked us through the process – answered all of our questions.”
Before even officially switching to Stockton, Brittany says that Sherri was able to find an issue with the current asking price that would have caused Brittany and her family to lose money when purchasing the home. “She recommended to our realtor that we change what we were asking…she suggested that before we even switched to her officially.” Brittany says that at the time, she was very impressed with the suggestion, “[I thought] wow, that’s awesome.”
“And so we switched,” she says, “…we ended up not qualifying for the [MCC] credit at the end of everything, but I’m still glad we switched lenders...”
Brittany says that once her family started their home buying journey with Sherri, it was simple. “The whole process was pretty simple – it really wasn’t complicated.” While many who have gone through the mortgage process will list extensive paperwork and documentation as a large obstacle, Brittany says that, for her and her family, finding the area of town that would best suit them was the biggest obstacle. “Paperwork wise we really didn’t have any obstacles – which was nice.”
Brittany and her family are now living in their new home; they are working on organizing their new space, and painting their walls – for the first time. “For four years we just had white walls – it was actually really depressing. Now I look around and have color…it’s more cheerful.”
“It is nice knowing that I own it and it’s not somebody else’s walls or stuff.”
She says that she feels a sense of accomplishment now, “we’ve been getting our ducks in a row for the last five years, so it was nice to get to…what we were trying to accomplish. Not that our apartment wasn’t a home for our children, but, [our home is] a better home environment for our family.”
“We enjoyed the whole process.” Brittany says that, originally, she believed that it would be more stressful. “It was just pretty seamless.”
Spring has sprung – and so has the housing market. According to a recent report from The National Association of Realtors, the pending home sale index rose 3.1% in February. Even more impressive is the explosion in housing contract signings. The Midwest and Southern regions of the U.S. have currently hit the highest level of contract signings in two years.
"Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents,” said Lawrence Yun, a chief economist with The National Realtors Association.
Yun went on to note that though the market is strengthening, there is still an issue with the number of homes that are available for sale. However, The National Realtors Association is projecting a 6.4% increase of homes available in 2015.
Are you thinking about buying your first home? Check out our First Time Home Buyer’s Study Guide to learn how to buy with confidence.
Down payment requirements can be very intimidating, and trying to save for a 20% down payment can seem impossible. Luckily, the secret is out – you don’t actually need to have 20% for a down payment. Because, really, who has an extra 20 or 40 grand lying around?
Here are your options:
Go for an FHA loan – FHA loans, or Federal Housing Administration loans, are not actually funded through the FHA, they are simply ensured by the FHA. The FHA insurance covers the lender in the event that a borrower should default, and because of that, these loans are considered less risky for lenders. The FHA loan comes with a low interest rate and as little as a 3.5% down payment.
Check out a USDA loan – USDA loans are issued through the U.S. Department of Agriculture and are great for borrowers who are unable to save for a down payment because they require NO money down. Yes, that’s right. These loans offer 100% financing. What’s the catch? Well, there is none really. Though borrowers must meet location and income requirements, the location requirements expand much further than the countryside. In fact, some suburbs that surround cities fall within the limits.
Try a contingency – This is only applicable to those who are already home owners. Essentially, a contingency is a clause in your contract that states that a percentage of the equity in your current home, will go toward the down payment of your new home, contingent upon your first home’s sale.
Are you a veteran? The VA loan allows veterans and qualifying spouses to get a 0% down mortgage.
Even if you can’t come up with a down payment, you do have options, and you can still purchase a home. If you’re interested in purchasing your first home, check out our First Time Home Buyer’s Study Guide to learn about the process.
Questions? Call a mortgage banker at 1 (888) 914-2276.