Should you buy or rent your home? Consider: In return for paying your rent, you get a place to live and a receipt. In return for making a mortgage payment, you get a place to live and acquire some personal worth in the form of equity. It’s the largest single investment you’re likely to make, and historically probably the best.
Buying a house is not out of the question for most people any longer. The largest obstacle for renters to own their own homes in the past has been the huge down payment requirements. While renters slowly squirrel away money, property values and mortgage rates climb and climb. Many people have spent years saving for that down payment without making a lot of progress but times have changed.
There are a lot of home loan programs available, and down payments are less important now than they used to be. Many require only one to five percent of the down payment to come from the borrower’s own funds. Some home loan products don’t require a down payment at all. For a sampling of online services that will help you obtain the best mortgage for your particular circumstances, see the resources in the Appendix.
Of course a 20 percent down payment means that private mortgage insurance won’t be required but saving that much might be more of a challenge than a borrower can over come.
A loan consultant can help to determine how much house a borrower should buy and what loan product would best suit their individual needs.For low-income families there are non-profit organizations dedicated to affordable housing and offer payment assistance programs. In the early 1990s federal housing laws were changed to allow the non-profit groups to help low-income families fund down payments, closing costs and other upfront cash requirements.
The key for potential home buyers is to get as much information as possible prior to buying a home.They can be sure to buy a property they can afford, improve their credit history so that they can get a better interest rate, and start to build a long term wealth potential for their family.