No matter what everyone says, buying a home is never an easy process. Home buyers are likely to encounter a number of things that come in their way of realizing their house dreams. And if you are a first time home buyer, then the road to homeownership is even more difficult. So, the first step for first time home buyers towards buying a house is preparing for the obstacles. One of the biggest obstacles before you is obviously the finances. And even though home loans have become an ultimate solution for buying houses, there are challenges in getting a loan as well.
If you need help to identify the financial concerns related to the home loans and then come up with plausible solutions for this, then you need to consult a home loan specialist from a residential property lending site. These companies not just provide you with several loan programs such as VA loans or the FHA loans for bad credit, which help you to finance your homes but also guide you with respect to the process of getting a loan approved. So, here, we have put together a list of issues related to home loans that first time home buyers have to often overcome. Take a look.
- Arranging the Down Payment
Unless you come from an affluent background, independently own an established and flourishing family business, or simply have won a lottery, buying a home with your savings is next to impossible. You will require a mortgage. And even though you get a certain amount of loan approved, you will require paying a certain percentage of the loan amount as down payment. Some loan programs allow availing the loan at 0 down payments although you have to meet certain other conditions for that. But most of the loan programs will require you to pay at least 3.5% down payment. So, you need to consider your finances and calculate how much finances you have to keep ready.
- Maintaining the Credit Score
Next, the magical numbers that can open the gateway to a conventional mortgage program for your home would be the credit scores. You have to maintain a certain amount of credit scores if you want to get your loan approved. So, the next concern before the first time home buyers is maintaining the credit history. You have to be very careful about the purchases you are doing on credit if you plan to apply for a home loan program because it will lower your credit scores. Various loan programs have certain fixed credit score requirements. So, depending upon the requirement, you must maintain the credit report. For example, if you want to opt for the FHA loans, you have to keep your score at 580 or higher to get the mortgage with a 3.5% down payment. However, FHA loans are pretty flexible so if you cannot meet this credit score requirement and have a score somewhere between 579 and 530, you will still be eligible for the loan but your down payment will be at least 10%.
- Preparing the Mortgage Insurance Payments
You should know that for certain loans, the mortgage insurance also plays a crucial role. You might have to pay an upfront payment too. However, this payment can be refinanced as a part of the loan amount. But you have to also keep the annual payment in mind as well. For instance, in the case of the FHA loans, you have to pay 1.75% of the loan amount as the upfront premium and another annual premium, which is to be paid on a monthly basis, should also be considered. This will depend on the amount you are borrowing, the initial loan to value ratio, and the duration of the loan.
So, if you are a first-time buyer planning to buy a house, you must evaluate all aspects of applying for a mortgage program. Make sure you are aware of the conditions you have to meet and the sort of problems you might have to face whether you opt for the FHA or the VA Jumbo loans in Texas.
Author Bio: Joan Gallardo an experienced Senior Loan Officer, writes on the 3 problems a first time home buyer might face with the mortgage programs such as VA or FHA loans for bad credit. Follow his blogs to know more about the FHA or VA Jumbo loans in Texas.