Thu 24th Sep, 2009
Home Buyer Concerns
There are many who want to purchase a home, but are scared after hearing all of the talk about how nobody is lending money and for people with a bad credit rating that of course means there is no way of obtaining a mortgage. First of all, there will always be a company around that will lend money and even though high end banks often restrict the amount lent out and to whom they lend money to, there are always other options available. Secondly, those with bad credit won’t get the best interest rates, but they can still get a mortgage and buy a home.
The first thing a new home buyer, or someone who hasn’t purchased a home in a long time needs to remember, is that adjustable rate mortgages should be avoided, if at all possible. The last thing you want to do is to get yourself stuck in a mortgage that you cannot get out of and cannot afford.
If you find yourself unable to pay your mortgage and the only way out is foreclosure, you picked the wrong kind of loan. Do not let anyone tell you otherwise, a fixed rate mortgage is always preferable even if you end up paying a point or two on your interest.
If you do have to get an adjustable rate mortgage, because it is the only option available to you, you want to make sure that you are making a long term plan. You need to take action right away to do whatever it takes to improve your credit rating so that you can refinance before your first interest rate increase is due, or shortly thereafter. This way, you can grab the home you want, you can take advantage of the lower interest rate for a couple of years and once your credit is better, you can refinance into a better type of loan.
When buying, if you are having difficulty rounding up the down payment and on top of that the closing costs, you should seriously consider asking the seller for help. More often than not they will compromise by paying all or at least some of the closing cost. This benefits the seller by helping them to dispose of the property.
When someone is selling a property, they either need cash, need to settle a divorce, or need to avoid a foreclosure on their own credit reports. This means that they might be more willing to work with you than you think.
Remember that it is also possible you will have to obtain mortgage insurance. This is normally required when the money paid as a down payment is less than 20% of the home loan amount. This mortgage premium is added to your monthly mortgage payment and is therefore generally affordable.
Obviously there is a lot to take into consideration when buying a home and that doesn’t matter if it is a first time purchase or the tenth house purchased. There is always something to worry about and questions that will need answers which means that if you need to take whatever time you need and ask for advice whenever you require it. If you do that, then there should be no problems.