One of the most exciting times in a person's life is when an individual or family decides to purchase a new home. Since few Americans are able to pay upfront in full for a home, it is not uncommon to sign a mortgage. Although this transaction may appear to be stressful and does come with a large commitment, there are several things you can consider to make certain that your decisions are sound and wise and in your best interests.
It is commonly assumed that a down payment of at least 20 percent is required, but there are some programs that allow little to no down payment. If you have been a member in the United States armed forces, the Department of Veteran Affairs guarantees a zero-down mortgage for all veterans, active-duty service members and many members of the National Guard and Reserves as well. The Navy Federal Credit Union also offers zero-down mortgages, and Federal Housing Administration-insured mortgages allow for payments as low as 3.5 percent. While bad credit may certainly play a role in a person's ability to get a mortgage, they may still be available for potential buyers with a credit rating as low as 500.
It is advised by many mortgage lenders that borrowers also keep a reserve, or savings, in place, in case you are hit with sudden and unexpected expenses. These minimum reserves will be calculated by your lender. Maintaining a significant reserve is an important step in assuring that your future is protected against unexpected financial hurdles that may spring up.
For anyone purchasing a home, especially a first time homebuyer, the process and concept of mortgages may seem overwhelming. During these times, it might be in your best interests to get more information about real estate law. Together you can discuss your personal situation as well as your current and future goals and wishes in an effort to develop a sound plan moving forward.
Source: Bankrate, "10 Tips to have an awesome mortgage in 2017," Holden Lewis, Aug. 21, 2017