This BLOG On Buying Versus Renting Home And The Benefits Of Being A Homeowner Was Updated And PUBLISHED On January 26th, 2020
There are many Advantages And Benefits Of Buying Versus Renting Home.
- Many renters believe that they need a large down payment and closing costs to qualify for a home purchase
- Yet others believe that they need good credit and that outstanding collection and charge off accounts would disqualify them for a mortgage
- This is not the case
In this article, we will cover and discuss Buying Versus Renting Home And The Benefits Of Being A Homeowner.
FHA Guidelines On Home Purchase
FHA Loans are the most popular loan program in the U.S. HUD 4000.1 FHA Handbook states all the FHA Guidelines in securing an FHA Loan.
Here are the basic FHA Loan Requirements:
- 580 FICO Credit Scores to qualify for 3.5% down payment FHA Loan
- Outstanding collections and charge off do not have to pay off to qualify
- Homebuyers can get 6% sellers concessions by home sellers for closing costs
- If short on sellers concessions, lender credit by a lender can cover closing costs
- 46.9% front end DTI, 56.9% DTI back end
- Down payment can be 100% gifted
- Non-Occupant Co-Borrowers allowed
- 2 Year Waiting Period After Chapter 7 Bankruptcy to qualify for FHA Loans
- 3 Year Waiting Period After Recorded Date of deed in lieu of foreclosure or foreclosure to qualify for FHA Loans
- 3 Year Waiting Period After Short Sale to qualify for FHA Home Loans
- Borrowers under Chapter 13 Bankruptcy Repayment Plan can qualify one year into their Chapter 13 Repayment with Trustee Approval
No Waiting Period After Chapter 13 Bankruptcy Discharged Date.
Top Reasons Why Renters Prefer Buying Versus Renting Home
Homeowners do not need permission from the landlord to make modifications to their homes:
- Renters need permission to paint a room, change appliances, re-tile floors, adopting pets, remodel the kitchen, remodel the bathroom, wallpaper rooms, plant vegetable gardens, and adding a roommate
- Another benefit of buying home versus renting is that you have home security where you do not have to worry about every year whether or not your landlord will offer to renew your lease
- A landlord can opt not to renew your lease and ask you to move out
Concerns With Buying Versus Renting Home
Many renters fear the idea of buying a new home.
- Many renters feel do not understand the home buying process and believe that they need a substantial amount of money down and great credit scores
- This article is geared towards renters
- Renters need to come up with security deposits, first months and last month’s rent
- Renters need to complete a rental application and most of them require credit checks
- Many renters do not realize that their monthly mortgage payments can be less than monthly rental payments
- Many renters do not realize that they only need a 3.5% down payment on a new home purchase
- Many renters do not realize that most home buyers do not have to come up with closing costs out of pocket
- Closing costs can be covered by a seller’s concession or a lender’s credit
- Most renters do not realize that they can have poor credit scores and still qualify to purchase a home
- Did you realize that you can still purchase a home even with a prior bankruptcy?
- Did you know that you can buy a new home even with a prior foreclosure?
- Did you know that you can still qualify for a home mortgage loan with open collections?
- As long as you have a steady monthly income, renters can qualify for a mortgage loan
The Team at Gustan Cho Associates Mortgage Group are experts in helping first time home buyers get a home mortgage with no lender overlays.
Most landlords require a security deposit.
- Some landlords want a two or three-month security deposit
- This security deposit can go towards the down payment of a new home
- I have one client who is currently paying $1,250 per month for rent
- I qualified him for a $140,000 mortgage loan
- Since he is a veteran, he qualifies for a VA mortgage loan
- He does not have the best credit scores and he does have open collections and high debt to income ratios
- I just qualified him for a $140,000 VA mortgage loan
- He has a purchase contract for a $140,000 single-family home
- This client will get 100% financing due to his VA status
- No closing costs because VA allows 4% sellers concessions
- The only fee he needs to pay is the appraisal fee of $450.00 prior to closing which will get reimbursed.
- All of his closing costs are covered via seller’s concessions and by lender’s credit including the VA funding fee
- The best part of this deal is that his new mortgage payment which includes insurance and taxes will be $1,050 per month
- In this particular case, it is a win-win situation where this client benefits in buying versus renting home
Another plus with my client is that the $140,000 home he is purchasing used to be appraised for $240,000 three years ago. This client purchased this home at a very good price and the chances of appreciation are tremendous.
Renters who want to qualify for a home loan, contact us at 1-262-716-8151 or text us for faster response. Or email us at email@example.com.