There’s a lot of work involved in purchasing a home. Buyers have to research homes and neighborhoods and come up with lists of amenities that they’d like to have. Many of them work with realtors to arrange open house showings so that they can visually inspect houses in person before making an offer.
If you’re buying a home for the very first time, you may not be sure where to begin. Getting your finances in order is important. You’ll need to have enough money saved to be able to afford your down payment, monthly mortgage payments and monthly home utility bills. This is in addition to your other current expenses. Fortunately, there are several loan programs that can help first-time home buyers.
Buying a home in California isn’t always easy. You have to pay attention to current economic conditions and market trends. If you’re in a seller’s market, you may find yourself competing with others on homes in your price range. There could also be unexpected problems or delays that could occur. Determination, persistence and a proactive plan can help you achieve your goal.
Here are some of the most commonly used loan programs for people who are buying a house for the first time:
1. USDA loans.
USDA loans are backed by the United States Department of Agriculture’s Rural Development program. It’s intended for homeowners who live in rural areas. Income limits are imposed, but they vary depending on the region where you live.
2. VA loans.
VA loans are supported by the United States Veterans Administration. Military members and their spouses may qualify for this kind of loan. There usually aren’t any mortgage insurance or down payment requirements for VA loans.
3. FHA loans.
FHA loans are guaranteed by the United States Federal Housing Administration. They are perfect for people with less than perfect credit and first time home buyers. Loans can be offered with down payments as low as 3.5 percent.
4. Home renovation loans.
There are also several affordable home renovation loans that are available. Some of the most popular types are:
- FHA 203(k) loans. These loans can help homeowners take on ownership of a house that needs a little work. These loans are backed by the FHA. They take the property’s estimated value after repairs or renovations have been made into account. Borrowers can loan the money needed to finish those tasks as a part of their overall mortgage loan.
- CHOICE Renovation loans. These loans are offered through Freddie Mac. The government-backed company lets borrowers take advantage of low down payment alternatives. Buyers can borrow funds that will be used for repairs and upgrades and the price of the home that’s being purchased.
- Energy Efficient Mortgage program loans. This benefit is available for houses with green features or other attributes that save money on energy costs. The benefit can be added to your mortgage loan. It lets lenders borrow money for the purchase of a house and the costs of any associated renovations or upgrades that improve the house’s overall energy efficiency.
- HomeStyle loans. This loan is available from Fannie Mae. Down payments can be as low as three percent. HomeStyle loans can help new buyers acquire a home that is in need of remodeling or repair.
5. First time home buyer assistance.
Some local and state government agencies provide help for first-time home buyers. California’s Housing Finance Agency (also known as CalHFA) programs that can assist with home mortgages. Participating in loan officers can help you get started.
6. Conventional loans.
Conventional offers are offered by Freddie Mac and Fannie Mae. These organizations are government-supported. Some of these loans can be secured with down payments for as little as three percent of the home’s sale price. The amounts and terms can vary by region.
7. Good Neighbor Next Door loans.
This program is available for emergency medical personnel, teachers, firefighters, and law enforcement members. This program is sponsored by the Department of Housing and Urban Development (HUD).
Homes listed in what are called “revitalization areas” can be purchased for up to half off of their list price. Properties are listed on the Good Neighbor Next Door site for seven days. People who buy these homes must agree to live in those properties for a minimum of 36 months.
8. Dollar Homes.
Dollar homes are also offered by HUD. The department states that these houses were obtained from the Federal Housing Administration. There aren’t many homes available at this price and listings can change frequently, so be sure to visit the Dollar Home section of HUD’s website for more information if you’re interested.
9. Traditional home mortgage loans.
Many banks, credit unions and other lending institutions also have home mortgage loans. The amounts and terms can differ from one organization to another. Most lenders will usually review your employment and credit history. If approved, they will supply you with a pre-approval letter. This document states the dollar amount and terms that they are willing to offer to you.
Minimum credit scores vary for different types of home loans and loan assistance programs. Most loans mandate minimum credit scores of anywhere between 580 yo 680 or more. The specific program or lender should tell you what their minimum credit score requirements are when you apply.
Generally speaking, the less outstanding debt you have, the more favorable you will look to potential lenders. Take some time before applying for loans to review your current income and expenses. Any credit card balance or other loans should be paid off or paid down as much as possible. Any unnecessary or redundant costs can be cut from your budget immediately.
Conclusion
Financing can be one of the most stressful yet most important parts of planning for home ownership. It may take you weeks, months or even years to be able to buy the house that you want. There can also be times when you’ll be outbid by other parties even if your financing has been secured and the winning bidders’ financing hasn’t.
No matter what happens, don’t give up. Keep paying your bills on time and set aside a certain dollar amount or percentage of each paycheck to go toward your goal of owning a home.
Before long, you’ll make an offer on a house that is accepted by the seller. It won’t be long until your dream of homeownership becomes a reality. You’ll soon be making lasting memories with valued friends and family members in a beautiful house for many years to come.
š Have Questions? Ask The Chris Eckert Real Estate Team
Give The Chris Eckert Real Estate Team a call today at 650.627.3799 to learn more about local areas, discuss selling a house, or tour available homes for sale.
