If you are considering buying a property, for living or investing in, financing is the first step to consider. No matter when it may be, it is never too early to start protecting your credit score. Credit scores directly affect your financing options.
Some major myths about purchasing a home are that “20% down is required to purchase a home”, or, “Your credit score has to be at a certain level to purchase a home”. Neither of these statements are true for a primary home to live in. However, investing in certain types of properties does require usually 25% down to qualify for a loan.
When applying for a mortgage, lenders will look at several factors, including your credit score, income, and debt-to-income ratio.
In the financing spectrum, the banks offer different types of “programs”, including traditional mortgages, FHA loans, and VA loans. Each option has its own set of requirements and qualifications, and it is compare the different options to find the one that best suits your needs. My clients usually find that the right lender can help guide them simply based on where they want to keep their monthly payment. Investing is a different type of loan all together, which the lender will guide you through, for example, is it a multi family building or condo to rent out?
For example, there are options to traditional mortgages, government-backed loans, as FHA and VA loans, which may have more lenient qualifications and can be a good option for first-time homebuyers or those with lower credit scores.
Other helpful hints are that banks often times have incentives to offset costs for first time home buyers. Also, different banks from time to time have incentives for a home purchased in a certain area. These are questions to ask your lender, but before using 1-800 mortgage, or an online quick mortgage qualification, it’s important to work with a professional real estate agent who can help guide you through the process and recommend a lender that meets your needs.
