To help avoid the confusion and unnecessary expense associated with buying a home, residential finance experts offer these six tips:
1. Your mortgage payments might be the same or less than rent payments. The monthly payment on a $100,000, 30-year, fixed-rate mortgage at eight percent (8.411 percent APR) is $733-less than what some people pay for rent.
2. You don't have to put 20 percent down to buy a home anymore. Three and five percent down payments are common, and some lenders even offer new zero-down loans to help buyers purchase a home without a hefty down payment. And, in most states, there are lenders that will even finance up to 103 percent of the home's purchase price, meaning you can finance some or all of your closing costs as well.
3. Buyers may ask sellers to pay for closing costs. As part of the negotiating process when purchasing a home, the buyer may ask the seller to pay for a percentage of the non-recurring closing costs, sometimes saving thousands of dollars for the buyer.
4. You can receive gifts or grants from relatives or nonprofit organizations. Many loan programs will allow a portion of the down payment to come from a relative. Buyers can also investigate down payment assistance programs and grants available through various nonprofit organizations and employers, as well as from many federal, state and local governments. Many of these programs are designed for low-, moderate- and middle-income borrowers.
5. You should always get preapproved before you begin house hunting. Buyers should get a written preapproval from a reputable mortgage lender before they start shopping for a home. Preapproved buyers will not only know in advance how much home they can afford, but their preapproved status gives them clout with sellers and real estate agents when the time comes to negotiate a sale price. Lastly, preapproval speeds up the loan process after a purchase contract is signed and avoids any last-minute heartbreaks after a home is found.
6. You can protect your interest rate while you shop for your home. Some lenders, like Countrywide, offer home buyers the ability to lock in a rate, at no cost, before they select a home. Home buyers can use Countrywide's Lock N' Shop to limit the maximum interest rate that they will pay (for up to 30 days). And if the prevailing rate at the time of purchase is lower than the locked rate, buyers can secure the lower rate. Home buyers can also extend the rate for an additional 45 days (60 days for a government loan) during loan processing when they submit a signed purchase agreement within the 30-day period and within five days of its signing.
To learn more, call Countrywide at (800) 570-9888 or visit www.countrywide.com.
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