Purchasing a home for the first time comes with tremendous pressure. Many things are under consideration, but the process becomes exciting with adequate information. A wide range of financing options reduces stress, but first-time borrowers often find it overwhelming. Once you have the time to undertake research, the basics of house financing can save time, effort, and money.
It is quite natural to feel that you are taking a long walk in the dark. The unknowns are chasing you, and you cannot find a way. What type of mortgage do you need? What are the eligibility requirements? As queries have started queuing up, you need to remember a few things. Loan programs and grants are popular first time home buyer programs with low credit scores in Houston, TX. The programs offer relaxed credit guidelines, down payment assistance, or deferred payment loans. Every borrower does not undergo an identical financial situation. So, you need to explore and find the best suitable option. Let’s go through the financing basics of first-time homebuyers in Houston.
Find down payment assistance grants
Have you researched down payment yet? It is an upfront payment when you start the home-buying process. You can treat it as an investment you make in the home loan. This means you are not going to get it back once you default on the mortgage. Conventional loans ask for a 20% down payment, but FHA loans allow a 3.5% down payment. This untangles the crucial situation of failing to save for down payment. The local and state government agencies provide down payment assistance for first-time home-buyers. It can help them meet the closing cost and down payment requirements.
Get behind the closing costs
FHA loan makes the perfect choice for new home-buyers. The minimum credit score requirement is 580 for 3.5% down payments. Even though the program has a truckload of benefits for the first-timers, you need to brace yourself for surprises. Besides saving for a down payment, look after the closing fees. It can be between 2% and 5% of the entire mortgage value. For this reason, shop around and compare the closing costs including title searches, homeowners insurance, and home inspections. You can find ways to cut down the closing costs by getting help from a seller. Another way to cut down the closing cost is to negotiate with a real estate agent.
Check your credit score
The biggest surprise is usually brought by the credit scores. A lot of things can happen, you can face rejection. When you forget to pay the bills, your credit score goes down. Furthermore, you might have become a victim of identity theft but you do not know it yet. Things can take severe turns when you do not keep a track of the credit report. A low credit score attracts a large down payment. Review your credit score and pay your credit bills on time.
Securing a first-time home-buyer program is not difficult when you are prepared. So, have a long discussion with your lender and figure out what can be done.