At some point in every adult’s life the monthly rent payments begin to get old, and they start to toy with the idea of owning their own house. However, if you are considering taking this step, remember that the responsibility of a homeowner is much greater than that of someone who merely rents an apartment. The care and maintenance of your living space will be up to you. Plumbing, air conditioning, yard work, you’ll be responsible for it all.
Unless you just won the lottery or your dead Uncle Fred has left you a little wealth, you would need to get a loan to obtain your dream home. There are 100% financing loans available for the people with no down payment. Government loans for those who meet the criteria. Conventional loans where you, as the purchaser are responsible to come up with a extensive down payment.
Again, the conventional loan is the most common type, and is what most people think of when they think of a home loan. This requires good credit on the part of the buyer and a down payment of at least 3%. If you were purchasing a $100,000 home, this would amount to at least $3,000, and this is assuming you have good credit! If you have clean credit, this might be your best bet, but otherwise this might not be the correct loan type for you. Luckily, there are other options.
In the realm of alternative loans programs, two of the most popular are government loans and 100% financing loans. 100% loans are offered through the government, but also through conventional means. The only way you would have a chance to secure such a loan through conventional means is if your credit history is spotless, and as such this is not necessarily a realistic option for the majority of individuals.
The Veteran’s Administration and the Federal Housing Authority both provide 100% financing loans – that means you don not have to make a down payment. But you would pay a price. Both the VA and the FHA believe 100% financing loans high risk and offset that risk with a superior interest rate.
These loans, however, do not represent the total of available options. There are, in fact, many more possibilities, your choice of which will depend completely on how good or terrible your credit is.
A no income verification loan permits people with good credit but no confirmable income or assets to get out of their residence and into a home. Inadequate credit loans allows borrowers with less-than-perfect credit to be eligible for competitive interest rates to buy a home. Such type of loan may even be utilized to consolidate debt, lower payments or for making home improvements. Pre-approval programs permit you to evaluate what house you can manage to pay for, also provide you the information and restrictive approval you would require to buy a home, even before you have a property picked. First time homebuyer programs are admired as they permit customers with fine credit, but not a long credit history or lots of money to put down, to get into a home. New construction loans permits the buyer to obtain a fixed interest rate even as the home is under construction and to keep that loan after they move in, eventhough there has been a change in the interest rates. But be cautious; this is a benefit if the interest rates reduce. But if you lock in a certain rate and the interest rates go down at the time of construction, you would still be paying the interest rate which you locked in.
Graham McKenzie is the content coordinator for a leading South African leading Homeloans and Bond Origination portal which provides access to FNB Homeloans.
