So you are thinking of buying your first home? Congratulations! You are taking a big step that will help you realize the dream of many as well as build personal wealth. As a first time home buyer you should know that there are several programs available out there to help you get you into the house you deserve at mortgage terms that you can afford. Before you begin your search for your first home be sure you understand these programs and work with your mortgage lender to take advantage of them!
The biggest resource for first time home buyers is the Federal Housing Administration (FHA). They work by providing private mortgage lenders with guarantees (insurance) against the loan that you take out with them. They help home ownership become a reality for many who don’t have perfect credit or have the finances available to otherwise afford the hefty up-front payment sometimes required to buy a home. It is important to realize that they are not there to help you buy a home you cannot afford; they are there to help you to buy a home you can afford by providing guarantees and assistance up front. It is up to you to make sure that you are not buying a home that you cannot afford over the life of the mortgage note. Never get yourself into more debt than you can handle!
The process of applying for an FHA loan is pretty much the same as applying for a conventional mortgage. You will need to provide verified proof of your income over the past three years – yet what qualifies as income is relaxed a bit. Social security, alimony, rent paid by other family members and such qualify as income under the FHA program. In addition, short-term debt doesn’t count against you (short-term is defined as being able to be paid off in less than 10 months).
You are allowed to use up to 29% of your total income towards housing costs and up to 41% towards housing expenses and other long-term debt obligations. Again, it is up to the homeowner to make sure they can afford the home they want to buy. Just because the FHA relaxes the restrictions doesn’t mean you should buy a home that you have to struggle to afford each month.
Through the FHA they will help you get started on owning the home of your dreams – but remember, it is a cooperative process. You should still shop around at various mortgage lenders and try and negotiate the best rates possible no matter if you are a first time home buyer or a seasoned pro.
There is a wealth of information available about the FHA programs. Your mortgage lender should be able to provide you with extensive information and guide you through the process. You can also read up on it yourself at www.fha.gov.
In addition to the FHA, there may be state and local programs available to you to help offset some of the costs of purchasing your first home. Check with your lender to find out if such programs exist.
By now you are probably familiar with mortgage refinancing. Each year a large number of homeowners take advantage of refinancing their home mortgage to help them reduce their interest, reduce monthly payments or take advantage of their equity to make home improvements or pay down debt. However, few people are aware that you can also refinance other loans as well. From automobile loans to personal loans, the financial services sector has refinancing options available for loans of every shape and size!
So why is refinancing so popular and why do so many companies do it? The answer is simple: The companies do it because they want to earn the interest payments you will make (it’s profit for them). For the consumer who is refinancing, they want to take advantage of better deals than what they original got or they want to free up money to pay for major repairs or other needs. Many people consider refinancing a win-win situation for most consumers. The financial companies win by earning profits and the consumers win by getting terms that are more favorable to them in the long run.
Recently, automobile refinancing has come into the picture as a way for consumers to rework their auto loans to get more favorable terms and help reduce the burden on their wallets each month. Since automobiles are an asset that doesn’t appreciate as time goes on, these types of refinancing opportunities are limited. Typically, the vehicle you want to refinance must be worth more than the loan you are taking out – the bank wants assurances they will get their money back. However, for those who purchase high dollar automobiles such as sports cars or large RV’s, refinancing can save them a considerable amount in interest and help lower their monthly payments to make the vehicle more affordable.
One thing you may not realize with automobile refinancing is that if you are in a tight spot most banks and financial institutions want to work with you to get your loan refinanced. It is far better for them to get you into terms you can afford than to let the car go back for repossession.
Of course, refinancing isn’t limited to automobiles and mortgages anymore – today, even person lines of credit and other loans are being refinanced at a record rate. Competition in the financial sector has led to a number of lenders wanting to earn your business – your interest – and they will often compete to the point where the consumer has many choices available to them, often at sweetheart rates.
In our modern economy it looks as if we are all looking for ways to reduce our monthly expenditures and take a little of the financial burdens off our shoulders. Refinancing offers an attractive way to do just that with no burden on the consumer and a lot of potential benefit in the long run. It may be the silver lining you are looking for in our current gray economic times!