How to Make Your First Home More Affordable
Real estate is getting more expensive by the year, and that can make it seem like owning your own home is a goal you simply can’t reach.
However, with just a few steps, you can bring down the costs associated with getting on the property ladder, and escape from the never-ending nightmare of renting. Here’s how.
Find Out What First-Time Home Buyer Programs You’re Eligible For
As a prospective homeowner, you need to know what programs and options are available to you when buying your first house.
There may be government or private loan programs that could help reduce the financial burden of getting a mortgage and moving in.
Start by researching online for local and federal incentives, such as tax credits or grants. You should also check with banks in your area about any special low interest mortgages they offer specifically for first time buyers.
Furthermore, look into state housing finance agencies which provide assistance through down payment support loans, and also offer other resources free of charge.
Research the Best Mortgage Options for Your Situation
When it comes to mortgages, there are a few different types you should be aware of before you begin applying.
The most common type is the fixed-rate mortgage, which has an interest rate that remains the same for the entire duration of your loan. This can provide peace of mind as you know exactly what your monthly payments will be over time. If you plan on staying in your home for a long period then this could be an attractive option for you.
Alternatively, if you think it may move within 5 years or so, then consider looking into ARM (adjustable rate mortgage) options, where initial rates tend to start lower than fixed-rate loans, but can fluctuate with market conditions.
Shop around for lenders as some may offer lower rates or discounts on closing fees.
Improve Your Credit Score
Your credit score is a key factor when applying for a mortgage, and can greatly influence the interest rate you receive.
Improving your credit before applying will save you money in the long run, so it’s important to take steps to raise this number.
Start by checking your report for any errors that could be affecting your rating. If there are any inaccuracies, then dispute them with the relevant credit bureau as soon as possible.
You may also want to consider reducing outstanding debts, or making more frequent payments on current accounts, both of which can help improve your overall score over time.
Lastly, try not to apply for any other forms of financing within six months prior to submitting an application for a home loan. If you’ve got a lot of recent activity on your credit report, this could have negative consequences, and end up hurting rather than helping you achieve better rates from lenders.
Investigate Different Ways to Reduce Closing Costs
Closing costs can add up quickly and put a dent in your budget, so it’s important to look into ways of reducing them.
Shop around for lenders as some may offer lower rates or discounts on closing fees. Also, you could ask the seller to cover part of the costs. They may be willing to do this if their asking price is not met, or you are offering other incentives, such as a larger down payment.
You could even try negotiating with title companies and attorneys who handle paperwork related to home purchases. See if they will reduce their charges in exchange for referrals you give to people in your social circles, for example.
The Bottom Line
It will take work to make buying your first home affordable, but this effort will not only pay off when the purchase goes through, but will continue to benefit you financially over the lifetime of your mortgage, so it is more than worthwhile.
