Looking for ways to arrange finances for buying a house in your preferred location? With an increase in the property prices, every property buyer wish to find a low cost finance option to purchase a property.The loans and financing options available for home or building renovation are different from those you need at the time of buying a house.
Arranging for finances can be a tedious task. On one hand, where you need to arrange a huge amount as down payment, on the other hand you need to make several visits to a financial institution for seeking home loans for depositing the rest of the amount in future.
In order to avoid the issues later, it is advisable to think about several ways to arrange finances.Here we discuss several ways to arrange finances for your new apartment. These include:
- Know Your Credit Scores
The first step to look for your home finances is starting with your credit as it plays a crucial role in applying for home loan. Credit reports or scores are maintained by the three reputed credit agencies, which include TransUnion, Equifax and Experian. These reports compile the facts that whether you faced a credit problem in the past or whether you are usually late with your payments.A low credit report or score can reduce your chances of acquiring the best interest rates. So, it is important to know your credit score and keep a copy of your report.
- Know Your Affordability
The next important step to arrange for finances involves determining how much property price you can afford. For this, you may use one of the Web’s calculators or ask the lender to calculate your credit, debt and income to get a more accurate calculation. This helps the lender to recommend you the most suitable loan type as per your affordability. A simple tip is to look for a home that includes only 2.5 times of your gross annual income. Another important point to decide on your affordability is that your home monthly payments should be less than 36% of your gross annual income.
- Public and Private Lending Agencies
There are several public and private agencies such as Department of Veterans Affairs, Fannie Mae, the Federal Housing Administration, and Freddie Mac that offer low down payment loans through mortgage and banking companies. Most of the lenders approve a larger loan amount if they see the home buyer has made a down payment of around 20%.
- Use Retirement Plans
If your available funds are not sufficient, you can find other options like Individual Retirement Plans (if available)that can be used by the first time property buyers to withdraw up to a limit of $ 10,000 without attracting penalty. You can also check if your employer can help if you are working with a big company and have an excellent work record.
- Take Parental Assistance
Due to the involvement of a huge sum of money in buying a property, taking financial assistance from family members and parents is a convenient option. If possible, taking about half of the amount from parents can give you a sufficient time to pay them later on.
- Go for a Joint Ownership
Last, but not the least, you can go for joint ownership with relatives or other family members. This can make it possible for you to arrange the finances jointly. However, this option has its own consequences as nowadays no one prefers to buy a shared property to avoid any future conflict.
You may take any one of these suggestions in to consideration as per your convenience for arranging finances for property purchase.