SECRET #1:  You Don’t Always Need A Large Downpayment.

If you are on a shoestring budget, there are 5 home loan programs with low down payment options that you need to know about: USDA (also called “Rural Development” or “RD”), FHA, VA, and Idaho Housing.

• USDA (also called “Rural Development” or “RD”): This program offers 0% down loan options in areas that are considered “rural.” In North Idaho, this includes all locations except Coeur d’Alene, Post Falls, and Hayden.

• FHA: This program is open to all of North Idaho. It requires 3.5% (of the total purchase price) down payment. FHA usually provides the best interest rates.

• VA: This is one of the best programs available, and it is exclusively for US Veterans. VA Loans offer 0% down options, low interest, and some of the most flexible terms available.

• Idaho Housing: This program is a type of “down payment” assistance for qualified Idaho residents. It is usually paired with an FHA or conventional loan, and covers all or most of your down payment costs – leaving you to pay only 0.5% down.

• Conventional: There are as many different conventional loan programs as there are lenders. Many lenders offer as low as 3% or 5% downpayment options on homes that are in good condition. Fixers, vacant land, and other specialty projects usually require 15%-20% down.

Lenders should always recommend the loan type that has the terms that will be the best deal for you, and if you speak with a lender about getting pre-qualified for a home loan, they will most likely reference one of the loan types above.

SECRET #2: Realtor Services Are Generally Free to Buyers

Here is a little known secret: Most Realtors don’t need to charge buyers for any home purchased through the Multiple Listing Service (MLS), which is the network used by most real estate brokerages in a given area. If your Realtor demands payment upfront, try a different agent. Realtors are expected to first seek to obtain payment from the sellers of the home you buy. In the last 10 years of real estate, I’ve only once received payment from the buyers in a very unusual closing – and it was something we all discussed and agreed upon, so there were no surprises.

SECRET #3: Home Ownership Is Cost Effective

Starting out in a new rental home or apartment is usually comparable in cost to starting a mortgage on a similarly sized home in a similar neighborhood.

Downpayments are roughly equivelant to what you would pay for “1st & Last Month’s Rent and Security Deposit.” Sometimes, the down payment is actually less expensive.

Unlike a rental, when you buy a home, you can lock in your payment for the next 30 years.  If the interest rates are high when you buy, you can refinance as soon as the rates come down for lower payments. 

What Would My Payment Be?

Go to an online mortgage calculator like this one to get a ballpark idea of what you might pay per month on your own home. Most mortgages also include mortgage insurance and property taxes in the mortgage calculation, so you don’t have to worry about those extra expenses later.

Don’t forget to speak to a lender to get pre-qualified and to find out exactly how much you can spend and keep your current monthly payments the same.

SECRET #4: Credit Score

You DON’T need perfect credit to buy a home.

Most lenders can offer you a great mortgage if you have a credit score of 620+. Some will work with credit as low as 580 if you have a higher downpayment. If your credit isn’t quite ready, it’s ok to contact a good lender 6 months, or even a year, in advance to guide your process. Many private lenders will look at your credit, show you which debts have the greatest impact on your credit score, and give you tips to raise your score quickly. Don’t be surprised if the lender tells you NOT to pay off your credit cards. For some buyers, their credit score is highest when their credit lines are about half full. Ask your lender to know for sure.

SECRET #5: It’s A SIMPLE Process

Home buying is easy – If you have the right team: A Lender, a Realtor, and You.

Lender- Lenders can be found in banks, credit unions, and private mortgage companies. Some offer more flexible loan programs. Some can work exclusively through email if needed (which is great if you work full-time). Some are available on weekends when you need them. Ask for referrals. Get a lender who will keep your specific needs in mind and ensure that your mortgage gets set up correctly.

Realtor: Find a Realtor you trust to be available for showings, to advocate for your interests, to draw up your offer, negotiate terms, and to coordinate closing.

 Once you have chosen a home and submitted an offer, your lender and Realtor get to work to grease the wheels and ensure that you have a smooth closing. The lender focuses on the loan; the Realtor focuses on everything else: inspections, appraisals, coordinating with sellers and title company, putting out the little fires unique to your home purchase.  In many closings, all the buyer has to worry about is packing!

      Don’t let your home be subject to the whims of a landlord.

        Invest your hard-earned money into a home that allows you freedom.

          Invest in a home that will increase in equity.

Buying a home is easier and less expensive than many renters believe. Take a few minutes and call me today to find out if buying a home is an option for you!