Getting a leg up on the property ladder is so much easier when there are government programs to help those who don’t think they can afford a home.
With so many options to choose from, it’s important to figure out how much you can afford first. Use mortgage calculators to determine what mortgage amount you can handle. They allow you to estimate what your payments will be based on the length of the loan and the interest rate.
The U.S. Department of Housing and Urban Development has counseling agencies in place throughout the country to give people advice on home buying, renting, reverse mortgages and foreclosure avoidance.
Government FHA loans help potential homeowners by giving them low down payments, low closing cost and easy credit qualifying options. In most cases, only 3.5% of the purchase price is required for down payment and closing costs and related fees can be added to the mortgage itself.
The Federal Housing Administration (FHA) also helps people finance mobile and modular homes. Aside from having loan options to buy the home, an FHA loan product exists to assist people in buying a mobile home for rented land on mobile home parks.
The government has also made it easier to upgrade homes to be greener with the FHA Energy-Efficient Mortgage.
If you prefer to start climbing the property ladder by getting a fixer-upper, the government has loan programs that allow you to purchase the home, remodel and include all the remodeling costs in the total amount of the loan.
Government programs will even counsel you on the types of mortgages that would be best for your situation.
For example, a balloon mortgage may be better than a traditional mortgage if you only intend on living in the home for four or five years.
With a balloon mortgage, your payments are similar to that of a traditional loan but the term is only a few years. Once the term is up, the outstanding balance is owed. You can either sell or refinance the home to pay off the balloon mortgage.
If you prefer a fixed rate mortgage and plan to be in the home for the long haul, consider a 30-year, 20-year, or 15-year mortgage.
The 30-year mortgage will offer you more affordable monthly payments but you will pay more interest over time.
15-year and 20-year mortgage terms end sooner, so you pay less interest. You will, however, be paying more per month than with a 30-year loan.
A VA loan is another government option that is extended to the active duty military, veterans and surviving spouses. With this loan you must demonstrate the ability to make monthly payments.
The USDA Rural Development Guaranteed Housing Loan is ideal for anyone making a low or moderate income and planning to live in a rural area. To qualify for this government loan, you must be buying a home in a designated area, known as a “Rural Development eligible area”.
Before making a decision, utilize government counseling programs to avoid making a costly financial mistake.