Psst…tell Your Kids That Buying A Home Is Easier Than They Think! Series Part I
We encourage our kids to plan for their future, but we seldom include buying a first home sooner than average as a path to building that future. Let them know buying a home is easier than they think.
Most of the people who read this column are not first time homebuyers. The fact of the matter is many of you that are first time homebuyers and reading this article are relatively mature individuals who are fighting off your commitment fears of being tied to a mortgage. But there is a huge segment of the population that could buy their first home, yet it doesn’t occur to them to do so. Who are these people? Well, it’s your 24 year old son or daughter, new to the work force, and is throwing away money on rent somewhere. Encouraging your children to buy a home when they are young is some of the soundest financial advice you can give them. Equity in a home is an easy way to grow one’s portfolio with very little investment. But the fact of the matter is it doesn’t occur to most of us to encourage the younger generation to buy early in their lives. And trust me, it rarely occurs to our kids themselves to consider buying a home in the early twenties. They are more concerned with buying a new Halo 3 for their Xbox.
Why do so many people miss the boat on this opportunity? It could be they plan to be in the area for only a short time because they will job hop to advance their career, thus viewing a mortgage as “too permanent.” I counter to simply sell the house when you move. Or maybe they expect their income to double or triple over the next three years. I say buy a home now, then upgrade to a new home; sell or rent the old house. Investing in real estate is a proven, safe and solid return on investment. And with the right combination of credit history (or a history of paying utilities, cable and your cell phone on time) and no money down, you or someone you care about can start investing in the future.
When Junior starts his new job at the company and 401(K) is available, he’s been informed by his folks, boss or peers to enroll and contribute at least a little something to it with every paycheck. Yet, he is rarely counseled quit renting that apartment for $750 a month and buy a $75,000 house. Where will he come up with the money to do it? There are multiple options for first time buyers that allow for 100% financing. Get the seller to kick in closing costs (up to 6% of sales price with some products), and one can close on a loan and bring no funds to the table. If your home value appreciates 4% in the next year, that’s a nice return on a no cash investment.
For some time, I’ve considered writing this series for first time buyers to let them know buying a home is easier than they think. But, the more I thought about it, the more I realized the advice I would offer would most likely not reach my target audience. So parents, it is up to you to supply your kids with this last little bit of advice and help to set them free to further establish their independence in this world. Clip this article out and tape it to their iPOD or the steering wheel of their car – someplace it will get noticed.
I think for most of us who have been through the experience, our first home buy was a very daunting experience. There are so many choices and unknowns – it can be overwhelming. In this series, I will try to break it down the process into small logical steps and make it easier understand the steps involved in financing your first home. Where do you start? That is perhaps the easiest part. Our newly established worker should first make a list of all his or her debt obligations such as student loans (unless deferred), car payments, credit card debt, etc. Hopefully at this age, this will be a small list. Then add what you think amount you could afford for a mortgage. Take that amount and divide it by your gross monthly income. If you come in at 43% or less, you’re in business. If you have something in your savings or checking – great. If not, don’t let it deter you. You have options.
Contact a mortgage specialist to drill out the details and find a good realtor who knows your market for housing you can afford. What next? Get ready to tell your landlord “Adios!.”
Watch the video related to financing home loan
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Help answer the question about financing home loan
is it possible to get 100% financing on a home loan with ficos of 561 and 624?we just bought a new vehicle the end of may, it's our only payment besides rent, will it drop our scores much if we let one company run our credit? we are actively paying off old debts and sold our last house a year ago march. any help would be appreciated.
About Author
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist, at question@kristinmortgage.com or call (865) 567-0113. Kristin will try to answer all questions on her website Home Loans Plain Talk.
Article Source: ArticlesBase.com – Psst…tell Your Kids That Buying A Home Is Easier Than They Think! Series Part I
Posted on October 29, 2009 | Under Finance Home Loan | 8 Comments
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8 Responses to “Psst…tell Your Kids That Buying A Home Is Easier Than They Think! Series Part I”
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If they have an established credit history, decent credit scores, and acceptable rental history (or previous mortgage history), there are still programs that offer 100% financing, although, they are not as easy to find. 100% is generally considered non-conforming, so, their best bet would be to contact some local mortgage brokers. Make sure they only inquire as to whether they have a 100% financing program available and do not provide their social security number until they have decided upon the company they want to place their application with. They may also want to find out the minimum credit score required, the average rate for these loans (they are usually higher due to the increased risk to the lender), and whether not you would be allowed to pay any of their closing (generally it is capped at 3 or 6% of the loan amount).
There are also programs that allow the borrower to take out a lower LTV loan and the seller (you) to hold a small 2nd mortgage (ie: they get a loan for 95% of the loan and you hold a 2nd mortgage on the remaining 5%). Most of these programs still allow you to pay a portion of the closing costs.
Lastly, there are still some down payment assistance programs available for FHA loans if they qualify. They may can get up to 97% on a FHA loan and then a 3% DPA. You as the seller pay the DPA back at close, so you may want to reduce the amount of closing costs to make up for the amount you will have to pay out. These programs offer the best rates, so, they may want to inquire about these first.
You should have started the day you signed the contract…a pre approval letter doesnt mean anything….you can still be denied the loan.
unfortunatly for you there is a mortage company some where that will get you a mortage.
suggest you do some serious homework b4 you get your self in deep financial poop.
get copies of 'home buying for dummies' study and digest. get info on home buying from the Gov. on their sites. visit daveramsey.com to understand what the mortage companies don't want you to learn or apply.
Never ever get varaible rate loans. no balloons. no zero downs. no 80/20% loans.
understand that cash is king and debt is slavery. never buy a house based on tax savings or growth projections or any of the bs you''ll hear in the industry. do you homework.
pply
Great! Please be sure to check out our other files on the website. Please let your friends know as well. Thanks and have a great day!
Donna Webber
very helpful thanks
You can still use Nehemiah. Thats where a non profit (ie seller) gifts Nehemiah 3 % down they give it to you, you give it back. That loophole will change soon but its in court right now.
I just did a loan with FHA and the credit score was 580, they had 3 months reserves in the bank. I had to run it 10 different ways until it was approved.
Its not an exact science.
To answer your question FHA doesnt lend money the are an insurance company. They pay the lenders for loss. They are the same as State Farm that insures a car. State Farm might say we wont take any drivers that had a DUI. WE refuse to insure them. FHA is the same they tell the lenders if you follow our guidelines we will insure you agaisnt loss. So Well Fargo, Washington Mutual ect do FHA loans. FHA secures them if you default.
But FHA is the easiest way to get approved.
Yes it sure can be pulled from you. They may run your credit again near the closing and find that out. I am assuming they have run credit and not known about the 2 missed payments.
If you are having trouble paying your student loans right now it would be best to wait until you are financially stronger in order to incur more debt.
You would be well advised to have several months of savings built up before you sign a mortgage loan. Home prices are not going up so be patient. Same home will probably be less 12 months from now.
It may be difficult but it really depends on what special programs you may qualify for. Everyones situation would be different so it is difficult to simply say yes or no. GOOD LUCK