As a home buyer, it may feel like the homes that satisfy all of your needs are staunchly outside of your budget. Don't give up hope; instead, utilize these three tips to maximize your home buying power.
1. Consider a Foreclosure or Short Sale
One of the most common ways that buyers can get the most home for their budget is to purchase a foreclosure or short sale.
A foreclosure is a home that has been repossessed by the bank that originally held the mortgage. Since banks are not designed to hold and sell real estate, they are motivated to quickly get rid of the home by selling it at a discount.
Short sales are different from a foreclosure in that the owner still retains possession of the home. However, the seller is trying to get the bank to accept an amount that is less than the amount of the mortgage on the home.
One drawback to purchasing foreclosures and short sales is that the buying process tends to take longer than that associated with purchasing a conventional home. However, your patience will pay off if you choose to go this route.
2. Look for Home Buying Programs in Your Area
Some state and private agencies provide qualified home buyers with down payment assistance. The requirements vary from program to program; some are specifically for low income buyers, while others are intended solely for first-time home buyers. Others may only offer help for properties that are located in a certain region. Most of these programs have some type of income or asset restriction.
Before applying for assistance, understand how the program works. Some provide home buyers with an interest free loan that they pay back over an extended period of time, while others actually give buyers cash to use towards their home. Another possibility is that the amount granted is actually a loan, but doesn't have to be paid back until the home buyer decides to sell the house.
When you apply for a program, be prepared to show proof of income and mortgage approval.
3. Ask for Assistance with your Closing Costs
In order to stretch their home budget, buyers may ask the sellers to pay a portion or even all of their closing costs. Conventional mortgages generally allow the sellers to pay up to three percent of the home's purchase price. FHA mortgages permit the sellers to contribute up to six percent of the home's purchase price.
When it comes to purchasing your dream home, it pays to get creative. Explore one of these three methods to get into a home that satisfies all of your expectations at a price you can afford.Share