Wednesday, September 30, 2020

Little Money Solutions For Home Ownership

Today I have a guest post from Phil Georgiades. Phil Georgiades is the CLS of V.A. Home Loan Centers, a government-sponsored brokerage specializing in V.A. Home Loans. He has been a practicing real estate professional for 22 years. To apply for a VA loan, click here! I hope you enjoy!

Have you ever wanted to buy a home but then changed your mind after you saw how expensive they are? If you did, then you’re not alone. In fact, according to a report from the Urban Institute in 2018, the homeownership rate for millennials was about 37%, which is 8 points lower than baby boomers and generation X at the same age. 

This lack of homeownership is due to a growing concern by new potential homeowners that they might not be able to afford it, resulting in the dream of homeownership being just that, a dream. However, there are ways to become a homeowner without burning a hole in your pocket, and that is by using government-guaranteed loans. 

There are three government guaranteed home loans, which are sure to make homeownership more accessible for people who are concerned about upfront costs. These loans are Federal Housing Administration (FHA) loans, U.S. Department of Agriculture Home Loans, and Veteran Affairs (VA) Home Loans.

FHA Home Loans

The first and perhaps more accessible of these home loans are FHA loans. These loans have proven time and again to be great for first time home buyers because they offer incentives like a low 3.5% down payment requirement. This requirement is lower than the usual conventional loan down payment of 20%.
In addition to the low down payment cost, FHA loans are also incredibly adaptable as to what credit scores they are willing to accept with a score as low as 580, you can still get you approved for an FHA home loan. Keep in mind, some lenders are ready to take lower credit scores, but they might require that you make a higher down payment.

FHA loans are also known for their low monthly and closing costs, the latter which can be covered by the seller in some cases. Also, if you’ve had the misfortune of declaring a chapter 7 bankruptcy in the past, you can still apply for an FHA loan. The only thing is that there needs to be a two year period from the time you initially declared bankruptcy.
The U.S. government guarantees FHA home loans, but they are lent out by qualified lenders. One such lender is FedHome Loan Centers, which does not charge any fees to the borrower since their prices are paid off by the investor.   

VA Home Loans

If you are a veteran, an Active Duty Service Member, or the spouse of a service member who is either missing in action or diseased, you might qualify for a VA home loan. This loan is one of the best available due to its $0 down payment and low monthly payment benefits. 

In addition, VA loans offer some of the lowest interest rates available, as well as no mortgage insurance premiums and no prepayment options. All of these benefits only require that you meet the eligibility requirements, which include:
  • You served either 90 days active duty during wartime or 181 days active duty during peacetime.
  • If you’re a member of the national guard or a reservist, you must have served for at least six years.
  • Qualifying as the surviving spouse of a service member, must have passed away while in the line of duty or from a service-related disability. 
Furthermore, VA loans which already have an excellent reputation, just got a little better. As of January 2020, the VA has removed their loan limits. Allowing borrowers not to be limited by their county’s loan limit, but instead dictated by their income and ability to make their monthly payments. 
Currently, V.A. Home Loan Centers have a loan limit of $5,000,000, and their team of real estate experts can help you through the home buying process.

USDA Home Loans

It turns out that the U.S. Department of Agriculture, which inspects our food also offers a government-backed home loan. USDA loans are for lower-income earners in rural communities who want to become homeowners.  This home loan offers some great incentives like $0 down payments, competitive interest rates, and flexible credit score requirements. However, there are certain limitations to where these loans can be applied. For example, these loans are only applicable to modest single-family homes that are within an approved rural development area. 

The United States Government guarantees all these loans, and, as a result, they protect the lender from loss in case the borrower is unable to make their payments. This extra level of security allows lenders to be more willing to negotiate terms that are more adapted to the borrower’s specific needs and wants. 
Today, millennials are having a tough time entering the housing market. Especially since, according to a study by Student Loan Hero, homes have become 39% more expensive than they were 40 years ago. Hopefully, having information about government-guaranteed loans and their low costs can help in at least partially addressing the issue of homeownership.