Are you planning to buy a house? If yes, chances are, you have started looking online for existing properties. Also, you might have noticed one common trend; houses aren’t cheap. Davy Talley – Keller Williams, a top realtor, noted that houses account for one of the most expensive single investments most individuals make in their lifetime. Owning a home isn’t cheap, but there are cheap ways to navigate the real estate market.
If you are focused on purchasing a home but don’t have as much capital at hand, below are some of the cheapest ways to get what you want.
Explore No-Down Payment Mortgages
There are several mortgage plans in the market. With hundreds of mortgage lenders and brokers to choose from, you will find it easy to choose the zero-down payment mortgage option. This mortgage payment solution does not require you to pay a dime upfront as part of the purchase cost of your dream home. To explore this option, you will have to decide which of these two types of loans is right for you.
Veteran Affair Loans (VA) are available to active service members or veterans. Persona who are related to actively serving members of the forces or veterans can also take advantage of this loan. VA loans are backed by the Department of Veteran Affairs and designed to make homeownership easier for service members and veterans. If you qualify for this loan, you have access to a wide range of benefits, including;
- No down payment required on a home purchase
- No continuing mortgage insurance
- Limited closing costs
- Flexible credit requirement for loan qualification
- Lowest mortgage rates.
Although VA loans require an upfront funding fee, you can easily include this in your overall mortgage loan amount for subsequent payments.
If you do not qualify for a VA loan, you can explore the USDA loan option. The United States Department of Agriculture backs this mortgage loan. To qualify for this kind of loan, you’ll need to be interested in lands or homes in rural agricultural areas. Applicants will also be required to prove a low to average income to support themselves and their families. Similar to VA loans, you stand a chance to enjoy a range of perks and benefits, including;
- No down payment is required.
- Reduced mortgage insurance costs.
- Low or below-market mortgage rates.
Explore Low-Down Payment Mortgages
If you do not qualify for any of the no-down payment mortgage options, you can explore other mortgage options that require you to come up with a low-down payment. One of these options is the FHA loan. The FHA loan is backed by the Federal Housing Authority and is available to applicants whose credit score is 580 or above. This category of applicants qualifies to enjoy a 3 to 5% down payment accommodation for their home of choice.
Applicants who have a higher FICO score of 620 or more can also explore mortgage loans that conform with limits set by Fannie Mae or Freddie Mac at a 3 percent down payment. One of the biggest advantages of this kind of loan is that you do not have to worry about out-of-pocket expenses in the form of a minimum borrower contribution.
Get a Gift, Loan, or Grant to Cover Your Initial Deposit
Another option to explore is to seek out gifts, grants, or loans that cover the down payment requested by the mortgage company. For home buying grants and loans, first-time homeowners may qualify for the Down Payment Assistance Program (DPA), which offers them access to thousands of dollars issued towards clearing their down payment. However, be sure to read the rules of engagement to be sure that they are favorable. You can also seek out gifts from family and friends to offset this bill. To enjoy gifts from family and friends, you should remember that;
- The money must be a gift that isn’t repayable. It cannot be a loan that has been disguised as a gift.
- The giver will be required to issue a formal letter to effect the gift to the receiver.
- A clear paper trail must show where the money has come from and how it has changed hands to the prospective homeowner.
While these approaches will certainly help you own a home without a heavy financial burden, you can explore several other options. Some of these options include;
- Convince the seller or lender to foot the closing costs
- Consider a fixer-upper
- Seek out foreclosed homes or short sale homes