For home buyers who wish to purchase homes within their budget, the general rule of thumb is to look for homes that cost up to three times their annual household income. Factors that also need to be considered include outstanding debt, current income, and savings. The down payment home buyers will make on their new home is basically the total savings they are willing to invest in their new home.
Home buyers need to have a minimum of at least 3% as down payment though the down payment ratio is typically 10% or more. Home buyers who have 20% or more as down payment generally have more options. Banks and other lending institutions are usually willing to lend more money to clients who can afford a large down payment. Home buyers who can afford large down payments do not have to pay for private mortgage insurance.
Generally, mortgage loans for homes range from a minimum of 15 years to a maximum of 30 years. The benefit of 30-year loans is that monthly payments are substantially lower. In addition, applicants who opt for 30 year loans can qualify for a much larger loan amount, which enables them to purchase bigger and nicer homes.
Most people (unless they’re extremely wealthy) do not pay cash for a home. Home buyers finance a home purchase by obtaining a loan from a bank or lending institution such as a mortgage company. Houston mortgage companies usually have a wide choice of lending options and possess funding from several client financial institutions that provide capital for the mortgage itself.
Generally, experts strongly dissuade home buyers from going for 0% down payment mortgage schemes as many home buyers who choose this option end up losing their homes. Studies have shown that over half of foreclosures were from 0% down loans. Most home buyers who go for 0% down either don’t make enough money or lack the financial discipline to save up for a down payment. Home buyers can ask Houston mortgage companies for down payment options ranging from 3% to 20%.
Financial experts at Houston mortgage companies also suggest that home buyers finance the down payment with their own money and avoid borrowing from relatives. This is because banks and mortgage companies will take notice if home buyers take on additional debt in addition to their mortgage loan.
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Articles Source: Tips for First Time Home Buyers