Buying Your First Home

Posted by Janis Penick on Monday, January 27th, 2020 at 2:05pm.

Buying your first homeBuying your first home can be an overwhelming task but it doesn’t have to be. The part of buying a home that is likely to make you the most nervous is financing. Finding both a great real estate agent that will help guide you as well as an excellent mortgage lender are essential to a successful homebuying experience.

If you have adequate income to support a mortgage payment without devoting too much of your monthly budget to housing, you may be ready to buy a home. One thing you will want to be sure of is that you pick an area you plan to stay in for a while. Owning a home means the home is yours until you sell it so while you can sell whenever you choose, the market may not always be in the best position for you to sell.

If you feel settled, talk to your mortgage lender about FHA loans. While there are many other mortgage options, the FHA loan is frequently selected by first-time homebuyers. The FHA (Federal Housing Administration) loan is an insurance-backed mortgage loan which is provided by an FHA-approved lender.  This particular loan has historically enabled first-time homebuyers the ability to afford a home with very little, to no money down, in comparison to other mortgages that may require as much as 20% down.

It is important to understand that the FHA is not a lender but an administration that designed a program allowing borrowers to access federally insured mortgages.  The lender will be the bank (or other lending institution), while the loan type is FHA.  With an FHA loan, you can finance your mortgage for as little as 3.5 percent down. Your credit score and loan amount will be used to help determine the interest rate as well as the amount of your down payment. 

Facts to know about an FHA loan:

  •         An FHA secured loan must be used for your primary residence (this does include up to a four-plex, however you must reside in one of the units).
  •         FHA insures loans at a much lower rate than other traditional loans.
  •         Lower credit scores are not as scrutinized by the FHA.
  •         There is no requirement to be debt free to secure an FHA loan (they allow for higher debt ratios).
  •         The down payment and closing costs are kept to a minimum.
  •         FHA allows gifting, meaning you may accept gift money from friends or family for up-front costs, thus lessening money out of pocket.
  •         Some FHA loans even bear a clause regarding the possibility of deferring payments. 

Another option for homebuyers is the FHA 203k loan, which allows you to borrow the purchase price of the home plus money for renovations if the home needs some work. It is still a low down payment option and criteria is the same as other FHA loans but if you don’t have significant savings for home improvements, this can give you some options that other loans will not. 

Talk with your mortgage lender to determine if an FHA loan is the best option for you. Once you know you can indeed qualify for an FHA loan, your real estate agent will help you find the perfect home to buy. 

The Janis Penick Team

RE/MAX Bastrop Area
Serving Bastrop, Cedar Creek and Smithville
janis@janispenick.com

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The Janis Penick Team is your ultimate real estate resource for Bastrop, Cedar Creek and Smithville, TX.

Image by Anna Armbrust from Pixabay 

 

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