Are you considering buying a home for the first time? Right now is a very exciting time for people to buy a home for the first time. Interest rates are still at an all-time low, housing is super affordable and the process can be smooth for people with good credit. With National Homeownership Month coming up in June, now is the ideal time to consider making the investment toward the American dream of owning a home. Before you make the leap toward taking the keys to your very first home, consider the following tips that are all part of the buying process.
Closing on a mortgage:
• Can take up to 60 days
• To help expedite the process, have pay stubs, tax returns and bank statements readily available
• Most mortgage terms are between 10-30 years
• How long you plan to live there may dictate what types of loans are available
• Work with your local banker to see what your best options are
Less than perfect credit? Ways to offset bad credit:
• Pay your bills on time
• The more time that passes after a bad mark, the better
• The Iowa Finance Authority and FHA are a couple programs that may help those people with less than perfect credit
Ideal down payment requirements:
• VA and rural development loans may require no down payment
• FHA could provide loans for as little as 3 to 3.5 percent down
• These loans may have mortgage insurance attached to them
Private Mortgage Insurance (PMI):
• Typically required for loans with 80 percent or higher LTV (LTV = Loan-to-Value)
• For example, if you’re buying a home for $100,000, but borrowing $80,000, you have an 80% LTV
Factors for how much you can afford:
• Terms of the loan (how long)
• Interest rates
• Amount borrowed
• Have to include all upfront costs which can be up to $1,500; including appraisal, county recording and initial escrow payment.
This article is provided in partnership with the American Bankers Association and Iowa Bankers Association for Iowa banks.