You might be thinking, is this even possible? Getting your ideal house at a reasonable price.
Well, you heard it right. Though there are very few houses that are literally cheap to buy. But what if you could afford your dream house that does not have to be cheap, yes.
To get the homes desired by you, all you have to do is follow the following strategies. Here, we have come up with the five most simple strategies for getting the ideal house at a reasonable price. We hope this article somehow helps you to find your dream house following these steps.
Do not worry even if you are a new homeowner.
Use a no-down-payment mortgage
Do you know about VA loans and USDA loans? These are the only two types of government-sponsored loans that let you buy a house without a down payment. To be eligible for a zero-down mortgage, you must fulfil a very specific set of requirements for each loan. Like, VA loans are designed to help active-duty military personnel, veterans and certain other groups.
So, if you meet these requirements, you can buy a home at a reasonable price. Likewise, low- to middle-income home buyers can apply for USDA loans. They provide financing with no down payment required, reduced mortgage insurance, and mortgage rates that are below market.
Or use a low-down-payment mortgage
What if you are not eligible for VA or USDA loans, this is a question that keeps coming up. But, why should you worry about it? It’s not like you cannot own a house just because you have no VA or USDA loans.
Yes, without those payment mortgages too, you can buy a beautiful house at a reasonable price, with a low-down-payment mortgage.
An FHA loan is a good option for prospective homebuyers with less-than-perfect credit. You might be eligible for a 3.5% down payment on the purchase price if your credit score is 580 or higher.
No “minimum borrower contribution” is required for any of these loan programs. That implies that neither the down payment nor the closing costs will come out of your own pocket.
If you are eligible for aid, you can use grants, gifts, or down payment loans to pay all of your upfront costs.
How about a DPA loan or grants?
Well, DPA (Down payment assistance programs) should be more famous than they are. Aren’t they?
The DPA program is an independent entity with unique policies and services. However, qualified buyers frequently receive thousands of dollars to help with their closing costs and/or down payment.
You should look into every DPA program offered in your area and submit an application to the ones you believe might be of assistance. Ask your loan officer, Realtor, or real estate agent for recommendations, or look up programs online.
If you’re lucky, you might be awarded an outright grant (a gift) that pays for part or all of your closing costs and down payment. Alternately, you might be approved for a loan that only needs to be repaid if you move, and even then, it might be waived if you stay in the house for a predetermined period of time.
You can also get family gifts though
Many parents and grandparents find great satisfaction in giving younger members of their family money for the down payment on a home. It is a world-known fact and moreover, acknowledged by the lenders too. And nearly everyone feels at ease with it.
But in this situation, certain guidelines must be followed. Like;
- It must be a genuine, unambiguous gift rather than a loan presented as a gift.
- A formal gift letter from the donor is required to confirm the agreement.
- The transfer of funds from the giver’s to the recipient’s accounts must be documented in detail by way of a paper trail.
There is no requirement that it be a parent or grandparent, of course. It can be anyone in your family. Furthermore, even a friend is free to give the gift if they so choose. However, the further apart you are from the lender, the more difficult it may be to convince them that everything is legitimate.
Request that the seller or the lender cover your closing costs
It ain’t an easy task to convince the seller to cover your closing costs. However, if the seller is eager to sell the house and you are the only potential buyer he/she has found till then, then there is a high possibility of them paying your closing costs.
If this approach fails, you could also try involving lenders. Although some lenders will only pay their own expenses, others will cover third-party costs, like the appraisal fee. Additionally, some will pay the lot’s closing-date obligations, such as homeowners insurance and real estate taxes.
Naturally, lenders don’t offer free meals as a matter of course. You will typically pay a higher interest rate on your mortgage in exchange for lender credits. And it’s safe to say that the money you initially save will be outweighed by the costs you end up paying.
But if money is tight when you close, you might decide it’s a price worth paying to own a home. Further down the road, you might be able to refinance at a lower rate. Isn’t it a good deal?
So, what do you think about applying these simple strategies to get your first or second home at an affordable price?