The process of securing funding for a new home, especially for first-time homebuyers, can be a little intimidating, mostly because it’s not a process you go through frequently. Plus, there’s also the size of the purchase—it is likely to be the biggest purchase you ever make, which adds some understandable stress.
However, so long as you go into the process prepared and with some knowledge about what to expect, you’ll find it isn’t nearly as bad as you’d feared. You can save yourself a significant amount of frustration by being prepared with your financing.
Here’s some information for you to consider as you work to secure funding for a remodeling project or new home in Poulsbo, WA:
- Budgeting: As with any kind of purchase you make, it is important to have a budget in mind for your construction project or home purchase. By having an ideal budget in mind, this will also help you determine how much you need to seek in a loan. If you are a first-time homebuyer, it’s a good idea to seek counseling from professionals so you can get a better grasp on your budget and how much you can afford to spend on a home. They will also be able to connect you with different sources for home loans that you can investigate to find a good interest rate.
- Documentation: To expedite the process of getting a loan, make sure you go into the process with all of the documentation you’ll need. This includes proof of employment and income, pay stubs, W-2 forms, account statements, information about other loans you’re currently paying, tax returns and Social Security information. To get the best interest rates, you should also make sure you have a good FICO credit score—720 or above is considered ideal for a home purchase.
- Types of loans: The most common type of home loan is a mortgage, which can be paid off over certain flexible periods of time. The most common payback period is 30 years, but you can find other arrangements, or choose to pay more than the minimum to pay it back earlier. You can take out conventional loans from a bank, though you may be required to take out personal mortgage insurance (PMI) if you don’t put enough down to begin with. There are also FHA loans, insured by the Federal Housing Administration. These loans do not require a 20 percent down payment or a higher credit score.
- The process: It’s important to have a grasp on the loan process so you know what to expect. There will be multiple steps, and it can take several weeks to get approved and to have the loan documents underwritten. You should try to get pre-approved before putting in an offer on any home.
- Closing: Remember that there will also be closing costs to consider for fees such as appraisals, inspections, loan origination, attorneys’ fees or realtor fees. These fees can add a few thousand dollars to the purchase.
For more information about securing funding for a new home construction project or remodel in Poulsbo, WA, contact the experienced general contractors at Coyote Hollow Construction today.
Categorised in: Home Building