Various Ways for Buyers to Purchase a Home

Various Ways for Buyers to Purchase a home

Let´s start clearing up the air on what exactly this article is about and its implications in your life, or why you should read it. As you can tell by the title, this article is about the many ways people can purchase a home, if you’re looking for a house but have no idea about the loan programs, mortgage or how things can be made a little bit easier during your purchase, this article was written for you:

Keeping it Simple 

You must be thinking, how can I start looking for a house? Do I have enough money for that? Can I really afford that nice house down the street? Let´s start with the basics and see how keeping it simple can save you some time and money.

Before looking for a house you might want to check your pockets to know what you can really afford, a good start is to strengthen your credit score and then see what you can afford.

Another step before going out looking for a home is to get preapproved for credit for your mortgage, with some basic bank information you can get an idea of the home you should be looking for based on your credit status.

You might also set your budget, the recommendation is to aim for a home that costs about 2.5 times your gross annual salary andyour monthly home payments should not exceed 36% of your gross monthly income. It´s never a bad idea to have professional help, a Realtor® can provide you with helpful information on houses and communities that isn’t easily accessible to the public.

Home Is Possible

The Home is Possible grant program is a down payment assistance program that helps those who can afford the monthly mortgage payments, but whose savings fall short of the necessary down payment, the grant amount can reach up to 5% of the loan amount to cover closing costs and down payment.

This is a really interesting program and it will give you some benefits such as: a fixed interest rate (30 year loan), grants based on the loan amounts and it can be combined with the MCC (Mortgage Credit Certificate) which there are no asset limits for homebuyers.  

Federal Housing Administration (FHA) 

The FHA is an agency within the U.S. Department of Housing and Urban Development.

Let´s learn a little bit about this type of loan, an FHA loan is a mortgage insured by the Federal Housing Administration. The Borrowers pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

The Federal Housing Administration (FHA) loans are a good alternative, they were created to promote homeownership. These loans have lower down payment requirements and more liberal underwriting standards than most conventional mortgages. Because of the stated purpose, FHA loans are usually restricted to homebuyers who intend to occupy the houses they are purchasing, FHA loans cannot be used to finance a second, or a rental home.

The benefits of FHA loans are:  because of the insurance, lenders offer FHA loans at attractive interest rates and with less stringent, along with more flexible qualification requirements.

FHA loans are very popular with mortgage borrowers, due to less rigorous lending standards and lower down-payment requirements. FHA 203K

The FHA 203K loans were designed to help people finance old houses that need repairs, in order to get an FHA 203k loan you need to work with an FHA-approved lender. Be careful, most of the time when people realize how much it will cost to remodel a house, they often realize that they can’t afford it. Or you won’t get a loan because the home is considered “uninhabitable”. That’s where the FHA 203k loan kicks in.

How it works:

Here’s how it works: Let’s say you want to buy a home that needs a brand-new bathroom and stairs. An FHA 203k lender would give you the money to buy (or refinance) the house plus the money to do the necessary renovations/modifications to the bathroom and stairs.

Most of the time the loan will also include:

1) A “contingency reserve” (up to 20 percent to complete the remodel if the event it ends up costing more than the estimates suggested) 

2) A provision that gives you up to about six months of mortgage payments so you can live elsewhere while remodeling the house, mortgage payments will keep happening on the new home.

There are two types of FHA 203k loans: The standard 203k, is for properties that need things like structural repairs, like landscaping; and the limited 203k, for energy improvements, or non-structural repairs in general.

We always recommend you consider getting professional help before buying a new home.

Please contact me at my local number 866 390-5676 for Las Vegas residents or anyone wanting to relocate to our greater Las Vegas area.

Effie L. Young, Broker-Salesperson