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Sixty-two percent of Americans own a home, according to the 2020 census. That percentage may be a little off, given the census coincided with a major election and a global pandemic.
But whether it’s sixty percent or sixty-five percent, that’s more than half of the American population who are paying mortgages instead of rent. Are you wondering if you have enough money to join them?
Or perhaps you have a chunk of money saved but don’t know exactly how the home buying process works. We’re going over how to finance a home and the next steps, below.
What Are Your Home Financing Options?
So, where do you go to be pre-approved? How do you decide what you can afford, other than online calculators? You have a few options.
Option 1: Traditional Mortgage Loans
Most people buy a house through their bank or a private mortgage lender. These are large companies like Pekoe, which essentially provide you with a loan and allow you to pay it back over time with interest. The amount you pay back, no matter the source, is referred to as your mortgage.
It’s common to get a 30-year mortgage, but shorter loan options are available for a higher rate.
Option 2: FHA Loans
The government benefits when you own home because you pay property taxes. So, they have a program that helps people who couldn’t traditionally afford a home buy one. That program is called the FHA loan program, and only a certain percentage of the population qualifies.
When you look up information about it online, make sure you’re first choosing official government websites for the most up-to-date information.
Option 3: VA Loans
If you or your spouse served in the US Military, you might qualify for a veteran loan. This program started a long time ago to thank veterans for their service and to make their transition back to civilian life more manageable.
Your bank will let you know if this loan type is available.
Next Steps to Buying Your First Home
Let’s say you’re pre-approved, you’ve found a home you love, and you’re ready to make an offer. You have the option of offering a certain amount in “earnest,” which is money you will not get back if the offer falls through.
It’s customary to make your offer contingent on a home inspection so that you know what you’re buying. Some people are foregoing this in our ultra-competitive market, but we don’t recommend that. You never know what issues are hiding that the homeowner has no way of knowing about.
If your home inspection comes back with a few things, you can ask the homeowner to fix it themselves before you move in. Alternatively, you can ask for that amount off the purchase price to fix it yourself.
How to Finance a Home: Closing the Deal
Once the inspection is done, you’ll attend the “closing” on your new home. This is your last chance to back out, as you’ll sign the papers that officially tie you to the loan you’ve agreed on at this meeting.
At the end of the closing, the owner will turn over the keys to you, and you’ll officially become the property owner. Congratulations! You’ve just become a homeowner.
We hope you enjoyed this guide on how to finance a home and that you feel more comfortable looking at the housing market now. For more helpful content, bookmark our site.
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