One common goal that just about every human being shares is that of being a homeowner. Whether your ideal new home is part of a newly built community or a one-of-a-kind custom home, the biggest hurdle in front of you is paying for it. Being in debt exacerbates this issue.
It must be almost impossible to get a mortgage loan when you’re in debt, right? You’d actually be surprised by how untrue that notion is. Many people are in some form of debt when they purchase a new home, but every situation is unique and depends on the type and amount of debt you’re carrying. Continue reading to get some tips to help you buy your dream home even when you’re in debt.
Build and repair your credit.
When it comes time for you to shop for a home loan, you’ll see very quickly that your credit is the number one factor in you getting a loan. Whether or not you’re in debt, one of the first things you need to do when you’re considering buying a home is to work on your credit.
Most major purchases are bought with debt, so you being in debt isn’t as big of an issue as you may think. The main thing lenders want to know is that you have the ability to pay them back and that you have a history of paying your debts to your other creditors. If you have a poor credit score, then you need to start working on repairing it.
One of the more effective ways to pay off your debts is to consolidate them so that you only have to make one monthly payment to all of your creditors. Paying all of your creditors off one-by-one can take too much time and doesn’t impact your score as quickly as consolidating your debt. As you lessen or eliminate your debts, your credit score and creditworthiness will rise, and lenders will have more faith in you.
Shop around for the best home loan for you.
Lenders are selective about what borrowers they do business with, so as a borrower, shouldn’t you shop around for the best lender? Not all mortgage rates are created equally, and not every loan will be the right one for you.
For instance, there are certain government incentives and aid programs that you may be eligible for if you’re a first-time homebuyer. You may even be eligible for certain types of aid and loans depending on your line of work and where you intend to buy a home.
It’s important for you to shop around for the best home loan for your budget and seek out any programs that may help you with the purchase of your home. Online registries like iSelect allow you to compare mortgage rates side-by-side to ensure that you get the best deal possible on your new home.
Save up for a down payment.
One of the most critical aspects of buying a new home is saving for a down payment. The typical down payment for a home is between 5% and 10% of the home’s total price. With as expensive as homes are, you should begin saving for a house a couple of years in advance. Even once you have enough for a down payment, you still need to account for moving costs and any new furniture you’ll need. You don’t want to save up to make a down payment and then be too cash-poor to make a comfortable transition into your new home.
Purchase a fixer-upper.
Houses carry more value than their market value may suggest–you can’t put a price tag on the memories you make in your home. Buying a fixer home is an excellent way to save a lot of money on a home, and you can turn it into the home of your dreams at a relatively low cost.
The keys to renovating a fixer home into are to plan and budget ahead of time as well as find contractors who can work with your vision and budget. Segal & Morel, custom home builders in Easton, PA, have the manpower, experience, and know-how to turn your fixer-upper into a home you’ll enjoy for years. Rather than try to cut costs and corners by doing it yourself, leave your home renovations to the pros.
Buy a home that’s in foreclosure.
While saving up for your dream home, you should also be on the lookout for nice homes that are in foreclosure. Sometimes, you can find a home that’s foreclosing that’s almost paid off. In those cases, the bank may only be looking to recover the remaining
balance, and you might be able to purchase the home outright with the cash you saved for a down payment.
