Home Loan

How a Low to no Down Payment will Help you in Long Run

Do you feel like you are locked out of homeownership because you cannot raise the 20% down payment? Don’t worry because we offer low down payment options! The low down payment options allow buyers to fast track the homeownership dream. Thus, the buyer does not have to wait for years to accumulate the savings to hit the 20% down payment mark.

So, how does the low to no down payment option help the buyer in the end?

1. The Buyer Puts Less/No Money Down

The 20% down payment requirement has been a significant hindrance to homeownership. This is mainly for first-time homebuyers who are mostly recent college graduates. Requiring fresh graduates who have not even cleared university loans to pay the high down payment makes it harder for them. Thus, they are left with the option of renting a home, as they struggle to raise enough down payments. The rising housing cost makes it harder for such persons ever to attain the 20% mark.

The low to no down payment mortgage option becomes the savior. With no money or as little as 3.5%, first-time homebuyers can begin the journey of homeownership. The government-backed low to no down payment mortgages started with the focus of helping such first-time homebuyers.

2. Helps to Fast Track the Dream of Homeownership

The homeownership dream could end up taking years as the buyer tries to raise the 20% home mortgage down payment. Remember, there are other costs to meet, like the closing cost, the private monthly insurance. Raising enough money to take care of these costs is not as easy for everyone. The low to no down payment option comes in handy, helping the buyers fast-track the dream of owning a home. This is by eliminating the down payment requirement (through the no down payment mortgage option) or reducing the Down payment amount (through the low down payment option). Hence, paying the other costs becomes much more accessible, reducing the time it takes to buy a home.

3. Buyers have More Cash at Hand

Buying a house in St. George Utah comes with some financial responsibilities, in addition to the down payment. A majority of homebuyers are left with little cash at hand upon paying the down payment. In some instances, the buyers are forced to let go of the nice house they had their eyes on. This is because they cannot afford the closing costs. Leave alone the installments on private monthly insurance. The low to no down payment mortgage comes in handy since the money the limited funds available can be distributed to cater for the other expenses. In the end, the homebuyer does not have to worry about being unable to afford the dream home.

4. They Don’t Have Strict Credit Requirements

Some low down payment home mortgages still do not have strict credit requirements. For instance, the FHA home loan accepts applications from borrowers with a credit score of as low as 580 so long as the borrower can pay a 10% down payment. However, note that the overall requirements are dependent on the mortgage lender you choose.

So, which are some of the low to no down payment options?

●       The FHA Home Loan

The Federal Housing Administration-backed home loan is a low down payment option available through approved mortgage lenders. The FHA home loan comes with a 3.5 Down payment requirement so long as the FICO® score is at least 580. For borrowers with a FICO® score of between 500 and 579, the down payment is 10%.

●       USDA Home Loan

Guaranteed by the United States Department of Agriculture, the USDA loan is one of the no down payment options. The borrowers need to ensure the property is within the eligible locations. The FICO credit score for the USDA loan is at least 640. However, the credit score requirement varies by the lender.

●       VA Home Loan

Backed by the United States Department of Veteran Affairs, the VA home loan is a no down payment home loan.

●       HomeReady Mortgage

The HomeReady mortgage is available through many mortgage lenders. It is backed by Fannie Mae and provides mortgage assistance to those with a 3% down payment. The mortgage offers flexible qualification requirements.

Conclusion

The low to no down payment mortgage options enable thousands of new buyers to afford a home. Talk to a mortgage lender near you to discover the low to no mortgage options you can qualify to borrow.

USDA Home Loan in Utah

Top 5 Secrets To Buy A House With Bad Credit

You are dreaming of buying a house in Utah, and on your first visit to the bank, you are told you have “bad credit”. This can feel, as if the deck is stacked against you, hence no chances of living the American dream of homeownership. Not all hope is lost yet. You can buy a house with bad credit. Records show that besides high down payment requirements, a credit score is another major hindrance blocking many people from owning a home of their dreams. So, what is the credit score and what does it stand for?

A credit score is a numerical expression that is based on a level analysis of a person’s credit files. The numeric expression takes into account factors like payments history, the total debt load, and how much unused credit one has. The credit score information can be sourced from the credit bureaus.

In this post, we share helpful insights to help the huge chunk of Americans unable to buy a house in Utah because of a low or bad credit score. First, let us look at why a credit score is such an important factor in homeownership.

Why Bad Credit Score is an Issue in Getting a Mortgage

We have seen that the credit score serves to represent the person’s creditworthiness. Thus, borrowers with a good credit score are considered low risk. Remember that the mortgage lenders are in the business to earn good profits. Thus, the mortgage lenders are willing to fund the dream of homeownership so long as the applicant has a high or a good credit score. Those with a bad or poor credit score are likely to be turned away by the mortgage lenders. This is since the person with a poor credit score is considered a high-risk borrower. The mortgage lender does not wish to risk the amount, and so they simply decline the mortgage application from persons with a poor credit score. so, what next for persons with low or poor credit score?

1. Take Advantage of the Low Credit Score Mortgages

The solution to buying a house with a bad or low credit score is applying for the mortgage options requiring a lower credit score. However, note that the applicant has to meet certain requirements. Here are some viable mortgage options when you have a poor or low credit score:

  • FHA loans for Bad Credit: The Federal Housing Administration offers mortgages for borrowers with a credit score below 580 so long as they can raise a high mortgage down payment of 10% or above.
  • VA Home loans: Veterans, active-duty military and their qualifying spouses can afford their dream loan with a low credit score.
  • USDA Home loans: There is no set minimum credit score. Thus, the buyers who meet the requirements set by the United States Department of Agriculture can apply.

As illustrated, each of the above options comes with its own set of requirements. Thus, borrowers are expected to verify whether they qualify.

2. Offer to Pay Larger Mortgage Down Payment

Mortgage lenders are concerned about the risk of losing money if they lend to a borrower with a poor credit score. a viable option that the mortgage broker may advise such borrowers is to offer a higher down payment. A high down payment can be considered as the commitment that the borrower is interested in buying a home. To run with this option, you have to start saving as early as possible, in order to afford the high down payment amount. Further, a down payment of at least 20% gives the borrower a chance to avoid private mortgage insurance, hence lower payments on the mortgage.

3. Buy Property for Cash

Buying the property of your dreams for cash is not out of the realm of possibility. Others have made it work, and you too can achieve the dream. However, this requires patience, and a high level of financial discipline to make the dream work. To that end, work out a savings plan, and get your finances in order, to fast track the dream of owning a home.

4. Improve your Credit Score

The credit score is a major factor when it comes to borrowing to buy a home. There are different approaches to implement in order to improve your credit score. here are some suggestions to bear in mind:

  • Review your credit reports for bad reports
  • Ensure all bills including your rent are settled on time
  • Pay all outstanding debts
  • Consider a debt consolidation plan

Improving the credit score may take longer than you anticipate. Thus, it is recommended that you keep tracking your credit score even when you do not plan to borrow.

5. Try a Partnership

A partnership is another option for buying a home if you have a poor credit score. you may have a poor credit score, but you have a high down payment, while the other party lacks enough down payment but has a really good credit score. a partnership can help you own a home, and eventually get out of the rent cycles.

Key Takeaway

Even with a poor credit score, you can still buy a house in Utah. talk to a mortgage lender near you for options on how to buy a house with a bad credit score. 

Mortgage Lenders

Home Rentals and Home Buying: Pros and Cons

Home buying, for some, can be an absolute dream come true! However, a large percent still prefer home rentals to buy a home. When ready to settle down and start a family, Americans face the renting vs. buying a home debate. To make a decision, you need to consider the pros and cons of home rentals vs. those associated with home buying. In this post, we uncover the pros and cons of home buying. We will also examine the pros and cons of home rentals. Keep reading to discover what the two sides hold.

A) Home buying

Before you have settled on buying a home, you must consider how a big financial commitment will affect your lifestyle. Thus, it makes sense to review the advantages and disadvantages of becoming a homeowner.

Pros of owning a home

1. The Federal Tax Benefits

One of the best benefits of settling on home buying lies in the federal tax benefits enjoyed by homebuyers. Here is an overview of the tax benefits accruing from home buying.

  • Enjoy Property Tax Deduction: The homeowners can cut down the taxable income by deducting the amount paid as property taxes. Such deductions will save the homebuyer a huge amount that goes into paying mortgage interest.
  • Mortgage Interest Deduction: Further, for the homeowners who itemize deductions, it can reduce the taxable income by deducting the interest paid on the home mortgage.
  • Enjoy more Profits upon Selling the Home: A taxpayer who chose to sell the home is expected to pay capital gains tax on the profits earned from the sale. However, homeowners are allowed to exclude from the taxable income up to $250,000 or $500,000 in joint ownership of the capital gains on the sale of the home so long as they meet specific

Thus, buying a home gives the buyer a chance to enjoy more savings in federal tax benefits.

2. Equity Building Initiative

Buying a home gives you a chance to grow your equity as you pay down the mortgage. Ideally, home equity is the difference between property sale value and the outstanding mortgage balance. Over time, as you pay the mortgage down, your equity is set to increase.

3. A home is a Good Long-Term Investment

Statistics show that the value of houses in the United States has been growing at an average rate of 5.3% for the period 1992 to 2020. Thus, owning a home is an excellent long-term investment. Even if the structure decreases, the value of the land where the structure sits keeps increasing. When buying a home, remember that you are investing in an asset for yourself instead.

4. Stability and Greater Privacy

American families tend to live long in a property they have bought. This is compared to a rental property where you may receive a notice to relocate at any time. Further, homeownership provides the benefit of privacy. You can renovate the property to your liking, compared to a property you have rented.

Cons of Owning a Home

1. Requires a High Upfront cost

Homebuyers incur a huge cost when starting the home buying process. The costs to anticipate when you decide to buy a home include:

  • Down payment
  • Closing costs
  • Property taxes
  • Mortgage insurance
  • Home inspection cost
  • Title search and title insurance costs

This is among other costs of owning a home.

2. Less Mobility

Another disadvantage associated with homeownership is to do with ease of relocating. Homeowners may find it challenging to relocate from one city to another even when offered an attractive job.

3. Illiquidity

Although a home you have bought is considered to an asset, selling the property may take longer than anticipated. Further, while trying to sell the house, you will be expected to keep paying mortgage repayments and the cost of property maintenance.

B) Home Rentals

Homeownership is not everyone’s favorite choice. A majority of Americans still prefer living in home rentals. Here are some advantages accruing from renting a home in the USA.

1. Lower Initial Cost

For renters, the initial cost is relatively lower. You just need to pay the security deposit plus first month’s deposit, the price of moving to the new home, and a small service fee to the property company if required. This makes it convenient for people who have just completed college studies and looking for a more stable job.

2. Property Maintenance is Not Renters Responsibility

The tenants are not asked to pay any amount to keep the property in good shape. However, a wise property owner calculates the cost of property maintenance and distributes it to all tenants in monthly rent amounts.

3. Flexibility

Renting a home comes with the benefit of being able to relocate anytime. However, having a mortgage makes it difficult to move, while selling the property still takes time. 

Cons of Renting a Home

1. Renovating the House is a No!

You have to consult the property owner in case you need to renovate the property. To that extent, you just have to live in the property in its current state.

2. You aren’t Building Equity

Renters are paying monthly rent to the property owner or the property company. Thus, you are helping the owner build equity by repaying the outstanding mortgage.

3. Rent May Increase anytime

You may be comfortable with the amount you are paying as rent. However, the property company may decide to increase the rent when they feel, and by a rate, they decide without consulting the tenants. Thus, it is difficult to budgeting rent amounts on a long-term basis.

Key Takeaway

Buying a home requires a substantial financial decision, which can be scary for the beginner. However, a reputable mortgage broker can help breakdown the requirements of purchasing a home, making it easier for the new buyers. Talk to a financial mortgage broker today to begin your journey of homeownership.

Home Buyers in Utah

How to Track Rent Cycles with Homeownership

Rent cycles can be a difficult thing to break. This s considering that the price of homeownership has been going up each year. This leaves the average American families with the home rentals option. This is because renting a home saves families the money that would be used to pay the down payment. In addition, the price of the home they would be saving to buy is going up constantly.

However, homeownership comes with its perks. Among the advantages of owning a home include equity-building opportunities. Further, homeownership comes with tax advantages as the homeowners save through mortgage interest deduction and capital gains exclusion. So, how can renters who are facing rising home prices and other obligations make the leap of homeownership? In this post, we feature some important options for renters who are looking to break the rent cycles.

1. Consider Home Loans with Low Down Payment

 For many families living in rentals, down payment is a major barrier to homeownership. To get out of the rent cycles, affected families can sign up for low to zero down payment home mortgages.  The low to zero down payment mortgage is the silver bullet solution providing a faster way to move from renting a home to owning a home.

However, low and zero down payment home mortgages may come with a high PMI and higher interest rate depending on the lender or the mortgage broker. However, note that the no down payment home mortgages are only available to select individuals. The borrow is expected to show they have an adequate income required to repay the loan, and that they meet the credit score requirements

The low / no down payment home mortgages include

  • VA home loan-(0% down payment)
  • USDA home loan-(0% down payment)
  • FHA home loan (3.5% down payment)
  • HomeReady™ Mortgage (3% down)
  • Conventional Loan 97 (3% down)

Thus, if high down payment requirements keep you from buying a home, consider either of the home mortgage options. Check the requirements and apply if you qualify.

2. Home Mortgage Options for Borrowers with Low Credit Score

Apart from down payments, another common barrier to homeownership is high credit score requirements. The conventional home loans require that borrowers have a high credit score. Given that majority of the first time homebuyers are also processing student loans, it becomes hard to meet the requirements. This is because they are still earning low income, which is split between basic requirements, and paying student loans. Thus, they are likely to fall behind with rent payments or students loan, affecting the overall credit score.

In such a case, the first time homebuyer mortgage with a low credit score becomes a viable option. So, what are the different home mortgage options for borrowers with low or bad credit score? Here are viable options to consider:

  • FHA home loans: any credit score below 580 requires a 10 percent down payment
  • VA home loans do not impose a minimum credit score
  • USDA home loans require FICO score of 640 although some go as low as 580
  • Conventional home loans requiring higher rates and fee for lower credit score
  • Fannie Mae HomeReady™ allowing lower credit score

The low credit score mortgages may come with a high-interest rate, PMI, or a higher down payment. This is to cushion the mortgage lender from defaulters. Thus, it is advisable that borrowers speak to mortgage brokers to find out whether they qualify.

3. Talk to an Experienced Pro

If you are planning to purchase a home for the first time, chances are that you may be feeling lost, and need some advice. Buying a home is an overwhelming undertaking, and potential buyers give up even before they begin the process. Some of the first time homebuyers qualify for a conventional home mortgage, but the fear of the unknown keeps them away. Thus, they end up stuck in rent cycles. A qualified expert can help you through the different stages of homeownership. This makes the journey of homeownership easier than you think. Thus, identify a seasoned expert and ask them to help you through the homeownership process.

4. Start Saving Now

There are some good reasons for setting aside some savings to pay the mortgage down payment. For instance, if a low or bad credit score is keeping you from buying a home, paying a high down payment helps. A 20% down payment on an FHA home mortgage allows you to borrow even if the credit score is below 580.

5. Start Getting Your Credit Score into shape

You have total control over your credit score. being an important piece when it comes to buying a home, it is advisable that you check the credit score and get it back into shape. Check whether there are wrong entries affecting your credit score. Moreover, pay any outstanding debts that could be affecting your credit score. Building the credit score can take more time than you think. The earlier you start the better.

Key Takeaway

You have total control over your credit score. being an important piece when it comes to buying a home, it is advisable that you check the credit score and get it back into shape. Check whether there are wrong entries affecting your credit score. Moreover, pay any outstanding debts that could be affecting your credit score. Building the credit score can take more time than you think. The earlier you start the better.