If you’re planning on buying your first home, there are a lot of things you need to know about the process. Even a cursory glance at the internet can show you the basic steps you’ll need to take care of before buying a house, but there are a few tips you might not know about. With the COVID-19 outbreak affecting the real estate market, we may be heading into a buyer’s market. All Finance Directory invites you to delve into some financial advice you can use to your benefit when shopping for a house.
Fund Your Down Payment
You can be required to pay down as much as 20 percent of the selling price of the house you want. As Redfin explains, the more you put down for your house will have an impact on interest rates and how much you’ll pay every month.
There are loan programs, however, that can cut these figures down. An FHA loan can reduce your down payment to 3.5 percent as long as your credit score is over 580. If your credit score falls between 500 and 579, then your down payment would go up to 10 percent. Interest rates are also in your favor the higher your credit score is. Another option is the VA home loan that’s designed specifically for veterans at different lengths of service. If you qualify for this loan, you won’t have to worry about a down payment at all and they have good interest rates.
Research Assistance Programs
Assistance programs can be a first-time home buyer’s best friend, so find out which ones you’re eligible for. According to NerdWallet, these programs can take the form of low-interest loans or grants. There are also some programs that are specific to persons in certain professions, such as first responders and educators. Each state may have different local programs, so make sure to shop around. You should also look around for grant programs that you can use toward your down payment or closing costs. In some cases, these grants are meant for people who are going to buy a house in a particular location, so make sure to ask all the right questions.
Get the Best Mortgage Rates
When shopping around for mortgage lenders, consider asking about mortgage discount points. According to Bank of America, these discount points can be accessed if you pay a fee to the lender at the time of closing in exchange for a reduced interest rate. Buying points can also yield some tax benefits, but it’s important to run the numbers to ensure this option is right for you. Whether you choose to use discount points or not, it’s essential that you keep your credit score under control. Once you’ve secured a loan, it’s recommended that you stay away from making major changes to your credit score, such as getting another credit card or taking out an auto loan. You can also freeze your credit by contacting each of the three main credit bureaus.
Closing Out Well
Once you’ve gotten to the point of finding your new home, don’t be afraid to negotiate with the seller. When negotiating, look at the prices of comparable homes and use this to make your offer. You may also need to conduct further negotiations if the home inspection finds issues that will need to be repaired. When buying a house, you’ll likely need a home insurance policy. While it would be tempting to just buy the cheapest insurance policy, it’s better to shop around for the best rates that still give you the kind of coverage you need. You can look for savings in bundled offers and having a good credit score can yield a fantastic rate as well.
Buying a home is a major financial decision that you need to be prepared for. While the traditional route can take quite a bit of money out of your pocket and be a large burden in the ensuing years, you can find ways to keep your costs in check if you know where to look. Make sure you do your research and take advantage of every option that applies to you. If we see home values decline during the COVID-19 pandemic, you may be able to land the home of your dreams at an affordable price.
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