Home Loan Information
There are plenty of benefits to paying cash for a home, but don’t overlook the opportunities that come with leverage.
One advantage, of course, is the fact that over time, your investment will grow in value. It can be safely said that real estate is one of the safest long term investments one can make.
That being said, you have a few choices as to how you’ll make that investment work for you. You can either pay cash for your home (Provided you have that kind of cash on hand), or you can finance. So which one is better?
Pros Of Paying Cash For Your Home
- The first, and most obvious, is that you won’t have a monthly mortgage payment
- You own your home outright, and are given title, as soon as escrow closes
- Escrow may close more quickly, as you have options to waive certain contingencies that are usually required when you obtain a mortgage loan
For most people, a 20 percent down payment is hard to come by. So what are your options?
Think about it. With the median price of a single family home in Santa Clarita topping out in the high $400,000’s, how easy is it to come up with nearly $100,000 for a down payment? Unless you’re REALLY great with money, or just came into an inheritance (Or perhaps you won the lottery), you may be hard pressed to have that kind of cash lying around. It’s not to say that people don’t save that kind of money, but for the most part, it’s not an easy thing to do in this day and age.
But let’s say you’re good for it. You know you can afford the monthly mortgage payment that comes along with a single family home in Santa Clarita, even if you don’t have the 20% down. Rest assured, you’ll be all right. There are plenty of options at your disposal.
1. Traditional “zero down payment” mortgage.
Yes, banks do offer zero down payment loans, but there is the cost of doing that kind of business in the form of Private Mortgage Insurance (PMI) that will be added to your monthly loan payment. On average, PMI costs range from .3% to 1.15% of the original loan amount, based on how much (or how little) you put down. Continue reading
Things you can do to get the ball rolling to qualify for the loan you want and the home you desire.
Believe it or not, when applying for a home loan, your lender doesn’t just pull a number out of thin air. There are a lot of items to take into consideration, as the dollar amount you’re being lent is considerably larger than any other loan you may have obtained in the past. This is why we urge buyers to plan in advance before considering buying a home. Having a plan of action, as well as making sure your finances are in order, are great steps in getting the home you want.
Your Credit Score
Of course, your credit score is taken into consideration. Your FICO (Which stands for Fair Isaac COrporation, the company that set the standard for credit scores) is at the forefront of what’s most important in extending credit. This scoring system is one of the most effective methods in determining your credit worthiness. Scores are affected by the amount of credit card debt you have, the number of times your credit has been checked, and of course, whether you meet your financial obligations in a timely manner or not. Continue reading