It’s important, when looking to buy a home, that you know all your options, as well as the peace of mind that you are financially stable to own a home. Experts answer the most common questions homebuyers have about owning a home for the first time.
Waiting Until You're 30?
One of the big questions on home buying is whether you should wait to do it in your thirties, when your life is more invested. Home building expert Aaron Hymas says age is not a factor. Home buyer Sophia talks about her experience. “I was a theater major in college, and I was determined not to become a starving artist. So I started my Roth IRA at the age of 18, convinced that I needed to buy a house when I graduated from college.” When it comes to buying a home, it’s important to consider the factors of the situation
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Huge Downpayment?
Do you have a hefty down payment secured for your purchase? You should also be secured in your workplace – have a position that you are confident you will have for 2+ years, so the fear of losing your home – and foreclosure – is not an option. You don’t have to have a credit score to be able to get a home, either. Mortgage broker Russell says, “I actually preapproved a buyer just this week where the borrower has been on the job for 2 years, no credit on her credit report, 4 alternative credit references provided, and has $5000 in savings and checking accounts. This buyer will be able to purchase with a USDA mortgage and 100% financing.”
Paying Off the Mortgage Aggressively
Another option for homeowners is paying off their mortgage aggressively. The big question often is, when should they do it? Aaron Hymas says when the time is right for your family. There are many ways to accomplish this. Refinancing from a 30 year mortgage to a 15 year mortgage is one of the easiest. By refinancing a $250,000 mortgage from 30 years to 15 at 5 percent interest, you’ll save about $178,000 in interest.
However, Aaron Hymas warns you should only do this in a financially stable environment. “You’ll have higher monthly statements and less flexibility,” says Aaron, a home builder. “With a 30 year mortgage, if you have extra money you can always apply it to one of those payments. But with a 15 year loan, you’re stuck with the higher payment. While you may be able to afford this now, the ability to focus on other financial goals or a decrease in income could throw a wrench into your overall plans.”
Having Good Comparisons
It’s important to factor in your interest rate with your mortgage. You should be able to get up and choose – pick which loan program is right for you, and move forward, no second guessing yourself. David, mortgage consultant, offers his advice on choosing the right kind of interest and loan program. “You might call up Lender A, and inquire about a 20 year fixed rate. They tell you their offer is 5.75 percent. But then you call Lender B, and they tell you, ‘Our offer today is 5.875 percent, but let me ask you how long you are going to be in your home? Is this your first house? Will you live there for 20-years? Have you thought about a 5/1 ARM? Have I told you about our new Payment Option Plan?’
A loan officer will be worth their salt if they talk you into comparison, so you can choose the right plan for you. Not everyone works with one type of interest rate, or loan. You have to work with someone who can help you choose based on your life, not some general economy statement.”
It’s important when looking to buy a home, that you consider whether your finances and your work stability offer you the chance to afford that home in the long term. Work with a financial planner and a loan officer who can help you look at the long term of your life, and plan whether your children, your job, and your credit are going to affect you later on in life with the home you want to buy, and you will be on your way to successful and smart planning for the right home and the right mortgage and interest rate for you and your family.
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