Buying a home is a giant leap in everyone’s life. It takes a lot of planning, research, contemplation, and discussions before you even start looking for a home. And once you start house hunting, it could all become overwhelming, and things could seem like they are moving too fast. However, do not worry. This is normal, and if you have the right real estate agent by your side, the process would be over real soon and in a smooth fashion too.
All you need to do is compare the various profiles of realtors, check numerous properties, and ask as many questions as you can to make sure you are landing yourself the right deal. Once you have these processes in place, it is time to start looking for ways to fund your dream project – your home. Here are some sure-shot ways in which you could get the money you need to buy your first home.
Mortgage
Applying for a home loan is the surest and easiest way to buy a property. It lets you buy a home that you cannot afford but could eventually own through the monthly installments. However, to make sure you find the best loan with an affordable repayment plan, you need to get quotes from various lenders and banks and compare them.
Once you get the quotes, you need to understand how these rates will impact your finances. Using a monthly mortgage calculator will help you understand the monthly EMI that you need to pay for the loan amount, tenure, and interest rate you have been offered. Understanding this will help you see the impact the loan would make on your finances and how you need to plan the rest of your expenses.Â
Personal Loan
A personal loan is one of the easiest types of loans you could get. So, you could use this to finance your first home. However, this should be your last option because personal loans come with a higher interest rate and have a short repayment period compared to home loans. So, go for it only if you do not have any other option left to explore.
Also, remember that you can avail of a personal loan only if you have a high credit score and a reliable source of income. If you need money to make the down payment, you could use a personal loan and pay it off to secure your home loan. However, this involves a lot of risks and could significantly increase your financial burden.
Peer Lending
This is a new trend that is catching up around the world. The internet has opened up numerous avenues for lending and borrowing money, and Peer-to-Peer lending is one such avenue. This lets individuals list themselves as borrowers, provide the details of the amount they need and why, along with your credit score.
The algorithms evaluate your profile and share quotes of lenders with you. You could pick a lender who matches your needs and get funding from them. This is an ideal way to borrow for people with a low credit score, as most banks would charge you a higher interest rate than a P2P lender.
Seller Finance
Most realtors will help you connect with sellers who are willing to finance you for the property. Yes, the seller will lend you the money you need to pay them for the home, and you would repay them through monthly installments instead of a formal lender. This loan type is ideal for buyers who do not secure a loan through the traditional means and are willing to make a high down payment or a balloon payment in the future.
If you cannot afford a high rate of interest, this loan is not ideal for you. Also, if you are going for this loan type, make sure you read the terms and conditions carefully because defaulting even a single payment could mean you are losing the property.
Government Loans
Numerous government institutions could help you fund your dream of owning a home. This includes the Federal Housing Administration, the U.S. Department of Agriculture, and the Department of Veteran Affairs. If you apply for these loan types, you could benefit from the discounted rates, tax benefits, and down payment assistance that the state and local governments offer.
But you need to have at least 500 as your credit score to qualify for these loans. Besides that, there would be a lot of documentation involved along with compulsory mortgage insurance.
Crowdsourcing
This is an innovative and popular way to fund your home. You could do this by listing your needs on websites like GoFundMe or Kickstarter, which lets you crowdsource money from charity, individual lenders, strangers, friends, and family. Everyone who sees your request could make a small donation of something, even as little as five dollars. When the crowdfunding request goes viral and more people start to pitch in, you would have enough money to pay for your down payment.
While the funds can be raised really fast using these platforms in most cases, occasionally, it could take you over six months. So, unless you have the patience and time to wait for that long, you shouldn’t be going for crowdfunding. Also, in a few cases, it could imply that everyone who donated money for your home through crowdsourcing owns a piece of the property. And the last thing you want is to share your homeownership with over a thousand strangers. To avoid that, make sure you read the terms and conditions of the website before making a request.
Well, these are some of the sure-shot ways to finance your first home easily. Following these will help you become a homeowner sooner than you think. And you do not have to end up in a financial swamp, too, after investing in a home. So, it’s a win-win as you have a valuable asset, and you are not neck-deep in debts too.