If you a buying a home for the first time, then it is more likely that you have never gone through the stress of the buying process. Making a wrong turn during the home buying process can be very costly, and in some cases it can make the whole process to fail. Some of the biggest challenges you can go through when buying a home for the first time include finding a good real estate agent, getting approval for a mortgage, getting a perfect home as well as staying within your stipulated budget.
The closing costs of a home are usually about 3 percent of its value. But this value may differ depending on the area that the home is in. If it happens to be a high tax area, the closing costs could be around 6 percent of the value of the house. If the closing costs are too high, then it becomes a problem for first time homebuyers to find an affordable mortgage. This is why government agencies offer assistance to individuals whose income is very low as well as grants to cover those costs.
In order to find help with closing costs if you are a first time home buyer, you will need to look for a first time homebuyer grant. You can get these details from the Department of Housing and Urban Development which usually consists of a list of programs that you can apply for when purchasing a new home.
Once you get the program, you will need to carefully study its eligibility criteria. For instance, the homebuyers' down payment assistance program in CA offers home buyers a maximum of 3 percent for the closing costs. You can only qualify for this if you are borrowing for the first time, and the home you are purchasing will have to be your primary home. You will also be required to meet the credit as well as loan requirements of the state's underwriting guidelines as well as the income limits required so as to get the house.
When applying for the grant, you will need to do it via an approved lender. A lot of grants are provided by lenders who are in charge of the grant application as well as the disbursement of the loan.
Note that you cannot be able to buy a home without closing costs. You can also get your closing costs paid by the seller of the house for VA, FHA as well as USDA loans. If you choose VA and USDA loans, no down-payment will be required. But if you choose FHA loans, you will have to pay a down-payment of 3.5 percent. However, the USDA loans are restricted to the areas which are considered to be rural on the USDA website.
It is important to speak to a real estate agent and know that income requirements that you will have to meet to qualify for these loans. Also check out programs on state level which may determine the closing costs in your region.
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