One of the most important things that individuals, couples, and families enter into in life is the purchase of their first home. While the benefits of owning a home are wide-ranging, homeownership provides the chance to build equity and allows individuals to take advantage of one of the largest tax breaks known to consumers. Below you will find a few tips for first-time home buyers looking to make the smartest home purchase transactions and investments for their future:
Paying Off Debt
While it seems like a good idea to save as much money as you can for the down payment of a home, this common mistake for first-time home buyers ignores the nagging necessity to pay off other debt first. Extra cash should initially go towards paying off credit card debt and other high-interest responsibilities. In the long run, you will finish further as credit card debt is expensive and ultimately limits your ability to save.
Figure Out What You Can Afford
To make sure you can handle the financial obligation of purchasing your first home, it is wise to figure out how much you can afford. This process will include how much you are able to borrow and how much of a down payment requirement you can satisfy. Usually, it is suggested to follow the premise that your annual mortgage payment, taxes and homeowner’s insurance should not go beyond 28% of your gross income. Additional monetary allowances you should also figure out include closing costs and the potential for various home repair issues that sometimes arise once you have moved into your new residence.
Loan Shopping
Locating the best loan for your individual circumstances is highly recommended and may require a little bit of research. A first-time buyer with steady employment and good credit can purchase a house without the prospects of leaving a down payment. Others must find loans that will cater to their current situation. It is also important to weigh all possibilities, including private lenders and local banking institutions when making a final decision.
Credit Worries
Some individuals fear their lack of perfect credit will hinder their ability to purchase a new home. Today, there are more and more possibilities to consider, such as the Fannie Mae “expanded approval” program, which helps consumers with blemished credit reports qualify for mortgages at competitive rates (sometimes two percentage points lower than other modes of financing). Other loans, such as the FHA-insured option presents no income limits and is especially helpful for those with low-to moderate incomes looking to buy their first home.
Down Payment Assistance
There are assistance programs that help low- and moderate-income families purchase their first home. Younger home buyers may qualify for a grant or in some cases loans are given to home buyers with a couple of strings attached, including the agreement that they must stay within the home for at least three years. The down payment assistance program caters to consumers who earn no more than 80% of a region’s median income.
Successful Home Searches
To get an idea of the kind of homes available to you, one may use Internet searches to browse hundreds of listings, check out virtual tours, and view tons of photos and aerial shots of potential neighborhoods. This process will also help you pinpoint the kind of house and neighborhood you wish to live in. Close to 80% of all home searches start with the World Wide Web. It is also important to shop around and not set your eyes on the first property you see – there is always something more accommodating just around the corner.
Watch the video related to home repairs
PC repair man visits a home to repair a computer which has an extremely simple problem with it. He charges a fortune to fix this simple problem and he also steals some computer hardware and replace with inferior types. All this is caught on camera.
Help answer the question about home repairs
When you buy a home can you borrow additonal money for repairs?I'm a first time home buyer so this all has me very confused…
Let's say you purchase a home for 138,000 and have a limit of 150,000 can you borrow the difference for home repairs?(under a FHA loan).
Hope that question makes sense… Thanks =)
Typical 1000-3000 Sq FT Home:
Roof: $4000-$8000
Windows: $1000-$4000
Electrical Upgrade(s): $5000 minimum
There are tons of variables though, you really need to get quotes from 2 or 3 contractors, or call Home Depot?
If you are not really a home repair guy, PLEASE do not tackle these jobs. If you mess it up, which you probably will (because these are complicated renovations) it will cost more in the long run for an expert to come in and make right. Get an expert in the first place. Besides, it won't take as long. And consider the fact that, home repair is the best way for a couple to start picking fights over piddly things. LEAVE IT ALONE!!
If you’re working through a recognized organization, then write some local building supply stores asking for donations. There may also be some salvage companies in your area that have surplus.
Keep an eye on your local freecycle group, if there is one; and keep checking the freebies section of your local paper or on-line classifieds site.
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If you are living in a HUD home try these websites: http://www.hud.gov/improvements & http://usgovinfo.about.com/library/weekly/aa061100e.htm
If it is not a HUD home, try this site: http://www.homebuyerfunds.com/local_home_repair_grants.htm
Here is some general info: http://www.rurdev.usda.gov/wa/SFH504lg.htm
Most of the time you have be a qualified on the basis of income (the lower, the more likely the qualification & approval).
Good luck!
HUD does not offer grants to individuals, whether for buying a home or repairing a home
http://www.hud.gov/grants/index.cfm
"While HUD does not offer direct grants or loans to individuals, we do work through local governments and non-profit organizations to make financial assistance and counseling available."
There are low cost government housing loans available, but not grants. An example of housing grants is for those afflicted with AIDS (14.241 Housing Opportunities for Persons with AIDS http://12.46.245.173/pls/portal30/CATALOG.PROGRAM_TEXT_RPT.SHOW?p_arg_names=prog_nbr&p_arg_values=14.241 )
You can go to the Catalog of Federal Domestic Assistance (CFDA) http://www.cfda.gov and Grants.gov http://www.grants.gov – these are two sites created by the federal government to provide transparency and information on grants. Browse through the listings and see if you can find any grant that would support your purposes. You can find grants for housing on this page http://12.46.245.173/pls/portal30/CATALOG.FUNCTIONAL_PROGRAM_TXT_RPT.SHOW?p_arg_names=func_cat_cd&p_arg_values=ML
HUD has a program called Homeownership Voucher Program that can help you with the monthly mortgage and other homeownership expenses http://www.hud.gov/offices/pih/programs/hcv/homeownership/
The question does make sense and is a good one. Most loans do not allow you to borrow money for repairs unless you put a huge sum down and then, what is the point.
However, there is a FHA loan out there that does allow you borrow for repairs but it is very restrictive, most lenders don't want to do it, and as far as loans go you are better off buying a home already improved.
To answer your question directly, a regular FHA loan will not allow you to "cash out" for repairs. Way too risky from their point of view.
One possible way is to get a 80% conventional loan, a 15% second mortgage, put 5% down, and then get it re-appraised. If it appraises at a higher amount they will loan off that amount giving you cash for improvements. But this can be hard to do if you credit is not excellent; like 720+
Hope this helps.
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You should always get at least 3 estimates. If they are all way different get a few more. Talk to people you know and get referrals. Word of mouth is the best advertisement for contractors. You should consider a bid in the middle range of the estimates that you get and consider how the company works. Do they stick with one job until the job is done or do they start 3 or 4 jobs at once and finish whenever.
To answer your other question, you can figure Labor costs to be about 60% of the job total.
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