Found Your Dream Home, But Short on Dough; What Are Your Options?
When it comes to buying a home, there are two distinct journeys a would-be buyer embarks on; the journey of finding the perfect home, and the journey of funding the perfect home. While “perfect” is dealer’s choice when it comes to finding the right house for you, there’s not as much variation in finding the right funding for your home. In its purest sense, the best way to fund the purchase of your house will provide you with very low fees and extremely low-interest rates; they also won’t give you enough paperwork to leave you drowning in it like some cartoon montage where the protagonist is overworked. Approximately 20% of home purchasers stated that they wished they had picked a different lender, and this article will help you avoid that mistake.
At the end of the day, there’s no “you need $X to purchase a home”, but the type of loan you ought to seek is based on your current liquid assets and assets that can be liquidated quickly. If you’re low on assets and seeking an expensive home, you may want to consider lenders who emphasize something called “jumbo loans”; these mortgages are reserved for “nonconforming loans” which run around $630k in high cost areas like Studio City, Sherman Oaks, and Encino ($424k for lower cost areas).
Naturally “jumbo loans” represent a risk, as the interest rate alone can leave you underwater quickly if your circumstances change (loss of job, unforeseen expense, etc.). For a conventional loan, you will need to qualify; this means a down payment ranging between 5% and 20% as well as a minimum credit score of 620 (some people suggest that the income-to-debt ratio should be below 43%, as it represents an ability to handle the above reference change in circumstances).
Some people simply do not qualify for conventional, or jumbo, loans – all is not lost. There are looser requirements for various loan options including loans from the VA, loans from the FHA, and loans from USDA (for example, the FHA will make loans to qualifying individuals with a credit score as low as 580 and will require a down payment of roughly 3.5%).
At the Chernov Team we understand that knowledge is power, and that is particularly true when it comes to financing your dream home; the devil is in the details, and its critical to understand your options. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.