One essential part of the American dream is living and purchasing a home in the US. This dream is so highly coveted by so many in the world, simply because American homes are some of the biggest and most extravagant homes out there. But these benefits don’t come cheap.
Estimates have shown that American homes are also some of the most expensive homes globally. The prices of homes vary by state, with San Francisco and New York having the most expensive homes (priced at $1.5 million and $700,000 respectively.) The median home price in the US has reached high levels this year, with the average costs of homes reaching $400,000. This makes it the most expensive essential purchase you’ll ever make in your entire life.
This makes managing finances a lot more vital in homebuying ever. So if you’re planning to purchase a home this year, then learn these financing tips from us.
Shop and Apply For a Mortgage
Applying for a mortgage is still the best way to purchase a home this year. Moreover, because of the growing need for houses in the US, many mortgage lenders are willing to give you a reasonable rate, given that you have a decent credit score. However, before applying for any mortgage, you should go shopping first.
Shopping for mortgages is a term used by homebuyers to see the best offers from lenders. You can’t apply for all kinds of mortgage loan rates, and it’s good to know which rates you can use beforehand. It makes the home buying process much quicker, and it can even save you some money. So make sure to exhaust your options before applying for the best mortgage that fits your budget.
If you’re purchasing a second home, or if you’re planning to buy another home after paying for your previous mortgage, then you can consider mortgage refinancing. Essentially, refinancing your mortgage means restarting your old mortgage on your terms. So once you purchase your first home, buying another one becomes much more manageable.
Look For Government Loans
There are many government loans available to US citizens, making the home buying process a lot cheaper and quicker. You should look out for one government loan is the Federal Housing Administration (FHA) loan.
The FHA loan is one of the best government loans available to US citizens. It has some of the lowest downpayments in the market and accepts people with low credit scores. This loan is designed for those in the low to moderate income-earning bracket.
Another good option is from the Department of Veteran Affairs. However, this loan requires you to be an active member or a veteran of the military. In addition, there’s a specific amount of days you need to be on duty given the year of your service. All of them can be found on government sites like this.
The VA home loan is considered the best home loan out there. It requires no downpayment and has a low-interest rate. But the homes offered to you are pretty limited, with some being close to a military base.
Financing your home through private lending options can be expensive. However, private lenders can offer you better home options and flexible rates. On the other hand, government loans can be much cheaper but give you limited access to the homes you can purchase, and the rates aren’t as flexible.
Flip a Home and Buy It
A growing option among the current generation today is house flipping. If you’re pretty good at exterior and interior design, you should consider this option.
Look for someone willing to let you flip a particular house. You do all the tasks the job requires. Then, they give you the funding for it. After the home has been flipped, you can live inside the home for a set number of years before you have to move out. The owner then sells the home and gives you your share, which you can use to purchase your home.
This agreement is pretty flexible but one you should take if you have the chance.
Lastly, you should consider peer-to-peer lending in purchasing your first home. Many people are willing to let other people borrow their money for a home purchase. Their rates might even be lower than the market value.
There are many peer-to-peer lending sites out there that can help you with this option. However, the rates here are more volatile than those from respected lenders, so be careful when choosing a loan through this method.
So here are different ways you can finance your first home. Each option has its strengths and weaknesses, so make sure you weigh those out before deciding.