Effective Ways To Finance Your Dream Condo For Homebuyers
This ARTICLE On Effective Ways To Finance Your Dream Condo Was PUBLISHED On May 27th, 2019
Acquiring a house or a condominium unit within the sprawling and bustling metropolitan area can be a young professional’s dream come true. Driving or commuting to and from work will no longer be a problem, especially if the location of your condo is near your workplace. This ideal scenario may sound too good to be true, given the rising prices of houses and condos and the rising trend of mortgage interest rates. You may think that actually having your dream condo will stay a dream, but you can still actually be able to, provided you efficiently prepare for the financing of your preferred condo unit.
Save For Your Down Payment
One of the things you need to prepare is for the down payment of the condo unit you are planning to buy. You should also keep in mind that you’ll be paying for the monthly amortization of your condo, so you need to also consider your financial capacity to sustainably shoulder the monthly payments. Not only that, you have to make sure that the unit you will be choosing stays with you as the years go by. In essence, go for durability and practicality when it comes to choosing your unit.
The Top Effective Ways To Finance Your Dream Condo
If the condo units you are considering and going to be choosing from are within a big city such as Toronto, you can ask to see the listings in this area from an a professional real estate agent or several realtors. Ask for the final unit price from the seller and request for computation of the down payment amount. The typical down payment rate could be around 20% of the unit price, so you need to first weigh your options before settling for the unit that you will take. Although sellers or lenders allow lower than 20% down payment, it will also mean paying for a higher monthly amortization and you could also include mortgage insurance. So saving early for your down payment can help you prepare for it. Ideally, you have to provide your down payment within a year, but if you think a year is not enough to save that much for your down payment, you’ll need to adjust your down payment amount, as there is a possibility of real estate property prices going higher by the year.
Fix and Improve Your Credit Score
Your credit score or credit report is the primary determining factor considered by realtors, banks and financial institutions if you are credit-worthy or qualified for a loan. A bad credit score or a tarnished credit report can be a significant obstacle when it comes to buying a house or a condo. The first step to do before setting out to improve your credit score is to first accept and acknowledge your bad financial choices and be committed to becoming frugal and fiscally responsible. It is also important that you know what your current credit score is. This will give you an idea of how much you need to pull up your credit score if you plan to buy a house. Consult a mortgage broker or a financial advisor on how you can improve your credit score to improve your prospects of buying a house.
Explore Your Mortgage Options
Once you have decided on the downpayment percentage, you can then check on several mortgage options. If you are a first-time homebuyer, there are federal, state and local programs that can help you qualify for loans or even offer you grants toward your down payments. Different mortgage options have different pros and cons, so you also need to carefully weigh your options. Some of these mortgages are as follows:
- Conventional mortgages – these mortgages conform to the standards set by government-sponsored enterprises Fannie Mae and Freddie Mac and offer up to as low as 3% down payment.
- FHA loans – the Federal HousingAuthority insured loans allow down payments as low as 3.5%
- VA loans – loans guaranteed by the Department of Veterans Affairs also offer very low down payments and sometimes no down payment at all
Effective Ways To Finance Your Dream Condo And Loan Programs
You can go for the smallest possible mortgage payment option and choose a 30-year fixed mortgage. If you can afford even higher monthly payments, you can have the option of lowering your interest rate with a 20-year or 15-year fixed loan. Do some basic math and use your calculator to determine which of the mortgage payment options is the best fit for you.
For you to have a good chance at landing a good housing deal with the realtor, you need to collect a pre-approval letter. Having pre-approval documents makes you a determined buyer in the eyes of the seller. This puts you in an advantageous situation as compared to those that don’t have pre-approval.