This guide covers why rent when you can own a home. We will discuss the advantages of owning versus renting a home. We have discussed the advantages of owning versus renting in previous blogs. Every renter should seriously consider buying a home, and when they realize how easy it is, they will question why rent when you can own a home. Granted, that homeownership comes with responsibilities and costs. Ronda Butts, a dually licensed realtor and loan officer at Gustan Cho Associates, shares her thoughts about the responsibilities of being a homeowner:
Responsibilities of homeowners include unexpected costs such as maintaining the home. Homeowners can run into unexpected high ticket repairs such as replacing HVAC systems, plumbing, and electrical repairs. Another negative being a homeowner is you cannot move at a moment’s notice, but there are solutions.
Most renters believe that buying their first home is more difficult than it is. You should qualify as a homeowner if you have a job and can afford a rental apartment or home. Your monthly mortgage payment can often be lower than your monthly rental payment. Why rent when you can own a home? There are many reasons. The advantages outweigh the disadvantages.
Why Rent When You Can Own A Home?
A frequently asked question at Gustan Cho Associates is why rent when you can own a home. As a homeowner, you build equity in your home every time you make your monthly payment. Part of the monthly mortgage payment goes towards the principal, and as you make future mortgage payments, your mortgage loan balance will decrease. The Great Recession of 2008 has caused a drastic reduction in the values of homes nationwide. Some homes have lost over half their value. Home values have steadily been increasing recently. Buying a home now be rewarding in the fast future home appreciation values.
How Much Money Do I Need To Buy a House
Gustan Cho Associates has forgivable down-payment assistance home purchase programs with no money down and no closing costs. You can contact us for more details. Renting pays a monthly rent for the use of the apartment or home. This rent money is just an expense and can never be recovered, whereas, with a mortgage payment, the principal portion reduces the loan amount. The security deposit needed to rent a home can be used towards the home’s purchase price.
A home buyer only needs 3.5% of the purchase price for an FHA-insured mortgage loan for a down payment. There are closing costs. The mortgage lender can cover the closing costs in place of a higher mortgage rate or via the seller’s concession.
USDA and VA loans have no down payment requirements. Homebuyers can get 100% financing on USDA and VA loans. We have several down payment assistance first-time homebuyer mortgage programs with no money down and no closing costs. Those with excellent credit can get more lender credit due to the lower rate pricing. The higher the credit scores of the borrower, the lower the rate. The lower the rate, the more room to increase your rate and give borrowers a larger lender credit. The team at Gustan Cho Associates will work with every borrower to boost and maximize their credit scores.
Why Rent When You Can Own a Home: Get Qualified For a Home Loan
If you are a renter and are interested in being a first-time home buyer, please get in touch with us at Gustan Cho Associates at www.gustancho.com. There is no cost for a consultation. We are mortgage bankers without lender overlays on government and conventional loans. We also have the ability to broker non-QM and alternative mortgages. Alex Carlucci, a senior loan officer at Gustan Cho Associates suggest using tax credits to help with your home purchase:
Tax credits can reduce your tax liability dollar-for-dollar or increase your refund amount. Some tax credits may be claimed every year for the life of the loan, while others may be claimed only once. You can use voucher money to pay for housing expenses. They are usually given by local housing authorities or nonprofit organizations to low-income families who participate in certain housing programs.
Vouchers can cover part or all of your monthly mortgage payment or rent. We can review the maximum home mortgage loan you qualify for, your monthly payments, and how much money you need to purchase a home. For more information, please get in touch with us at Gustan Cho Associates at 800-900-8569 text us for a faster response. Or email us at gcho@gustancho.com.
Why Rent When You Can Own a Home With Down Payment Assistance
Down payment assistance for first-time homebuyers can help you buy a house. Saving sufficient money for a down payment is a major obstacle numerous prospective homebuyers encounter. The down payment refers to the initial payment made when purchasing a home, typically represented as a percentage of the total purchase price. For example, if you buy a home for $500,000 and put 10% down, your down payment would be $50,000.
A down payment has several benefits for homebuyers. It can lower your monthly mortgage payment, reduce your interest rate, help you avoid paying private mortgage insurance (PMI), and increase your chances of getting approved for a loan. However, saving for a down payment can also be difficult, especially in today’s competitive and expensive housing market.
Fortunately, various programs and resources can help you with your down payment. These are called down payment assistance programs, and they can provide you with grants, loans, tax credits, and other forms of financial aid to help you buy a home. This blog post will explain down payment assistance, how it works, who qualifies, and where to find it.
What Is Down Payment Assistance?
Down payment assistance helps homebuyers cover the upfront cash a lender requires to buy a home. The money can come from various sources, such as federal and state agencies, banks, and nonprofit organizations. The money can be in grants, loans, vouchers, and more.
Down payment assistance is accessible for various types of mortgages, including both government-backed and conventional options. However, down payment assistance programs are only for some.
To qualify for a mortgage and assistance, homebuyers must meet certain criteria, such as income, credit score, and pre-approval. Some programs may also have additional requirements, such as location, property type, occupancy, education, or repayment terms. Generally, down payment assistance programs require completing a homebuyer education course or counseling before applying for assistance. The course or session can help you learn about the home-buying process, budgeting, credit, mortgage options, and homeownership responsibilities. The course or session can be online or in-person and may have a fee or be free.
How Does Down Payment Assistance Work?
Down payment assistance works differently depending on the type and source of the program. This section will cover some common down payment assistance programs and how they work. Grants are money you don’t have to pay back. Government agencies or nonprofit organizations usually give them to low- or moderate-income homebuyers who meet certain
eligibility requirements.
Grants can vary in amount and be utilized towards either the down payment or closing costs. You can apply for loans to use for your down payment. Loans are money you must pay back with interest. Government agencies, banks, or nonprofit organizations can offer them as a second mortgage or a lien on the property.
Loans can exhibit varying terms and conditions depending on the program. Certain loans might be interest-free or deferred until the home is sold or refinanced, while others may offer low-interest rates or flexible repayment choices. Tax credits can be another option for your home purchase. Tax credits are money you save on your taxes. Federal or state governments can offer them to eligible homebuyers who purchase a home in a designated area or meet certain income limits.
Who Qualifies For Down Payment Assistance?
Why rent when you can own a home with down payment assistance for your down payment and closing costs? If you structure the deal right, you can own a home with no money out of pocket. To qualify for down payment assistance. You must meet the requirements of the mortgage lender and the assistance program. While the exact requirements may differ based on the type and origin of the program, there are some common factors to consider, says John Strange of Gustan Cho Associates:
Income: Most programs have income limits based on your household size and location. You must earn less than a certain amount yearly to be eligible for assistance. Some programs may require minimum income to ensure you can afford the mortgage payments.
Credit score: Most programs have credit score requirements based on the type of mortgage you are applying for. You need a certain credit score or higher to qualify for assistance. Some programs may also consider other aspects of your credit history, such as debt-to-income ratio or payment history.
Why Rent When You Can Own a Home: Let’s Get Started By Getting Pre-Approved
Most down payment assistance programs require getting pre-approved for a mortgage before applying for assistance. Pre-approval means that a lender has reviewed your financial situation and agreed to lend you a certain amount for a home purchase. Pre-approval shows that you are a serious and qualified buyer and helps determine how much you can afford to borrow. John Strange warns that down payment assistance programs do have restrictions. He said the following:
Depending on the DPA, some programs are only available in certain areas, such as cities, counties, states, or regions. You must buy a home in a designated area to qualify for assistance. Down payment assistance programs may also have preferences or priorities for certain neighborhoods or communities within an area. Some programs are only available for certain properties, such as single-family homes, condos, townhomes, or manufactured homes. You need to buy a home that meets the property standards and specifications of the program.
Many down payment assistance programs may also limit the purchase price or value of the home. Most down payment assistance programs require that you live in the home as your primary residence for a certain period, such as one year, five years, or the loan duration. You cannot rent or sell the home during this period without paying back the assistance or facing penalties. Certain down payment programs allow you to buy a home as a second home or an investment property but with different terms and conditions.
Where To Find Down Payment Assistance
Many down payment assistance sources are available for homebuyers across the country. Here are some places where you can start your search. The Department of Housing and Urban Development, or HUD, offers various programs and resources for homebuyers, including down payment assistance. You can visit HUD’s website to find local home-buying programs, housing counselors, state housing agencies, and FHA-approved lenders in your area. Down payment assistance programs is not uniform, says Dale Elenteny, a senior loan officer at Gustan Cho Associates. You can have city, county, state, and federal down payment assistance programs. Dale says the following:
State housing agencies administer various housing programs and funds for homebuyers in their states, including down payment assistance. You can visit your state housing agency’s website to find out what programs and resources are available in your state and how to apply for them. Local housing authorities manage public housing and voucher programs for low-income families in their jurisdictions, including down payment assistance.
To determine if any programs or resources are available for homebuyers in your vicinity and to learn about the application process, reach out to your local housing authority. Nonprofit organizations provide various services and support for homebuyers in their communities, including down payment assistance. You can search online or ask for nonprofit organizations offering homebuyer assistance in your area and how to contact them. Banks and lenders offer various mortgage products and programs for homebuyers, including down payment assistance. Explore multiple lenders and compare their offerings to discover various options and incentives they provide for down payment assistance and the eligibility requirements.
In Summary of Why Rent When You Can Own a House With Down Payment Assistance
Down payment assistance can be a great way to help you buy a home with less money upfront. However, down payment assistance is not free and has pros and cons. Do your research and weigh your options carefully before applying for any program. You should also consult with a mortgage professional and a financial advisor to ensure you can afford the mortgage payments and the long-term costs of homeownership.
