Homebuyer Coaching & Education: Things you need to know

By: Maria J., Published: May 15, 2020 | Related: Home Mortgage Refinancing

Buying a home is still an American dream that a lot of people are still working towards. But, owning your own house is more than just the American dream, it's also the first step towards building wealth as well as financial protection for your family's future.

For most people, buying a home is the one of the largest investment that we will ever make in this lifetime, so it’s natural that you can feel scared or uneasy about how to go about it. To quell this, there is help available in the form of Home Buyer Coaching & Education.



There are many websites that offer this kind of service, but overall, they aim to do the following:

• Help you prepare yourself for homeownership
• Give you the knowledge about the whole process of buying a home – what it entails and how to give you a successful experience.
• Get your finances ready for a mortgage

Preparing for Home Ownership

Taking the plunge from renting a house to owning one can be scary and intimidating especially if this is the first time that you’ll be doing it. Understandably, there are many questions into the seemingly unfathomable prospect of buying a house. However, owning your house can be affordable if you look in the right market, and with the right type of loan. Here are some useful tips that might be of help in your journey to your first home ownership.

1. The first and probably the most important step is deciding how much you can afford. Usually, you can afford a home that’s between two to three times your gross salary.
2. Make a list of what features you would like your home to have as well as the kind of neighborhood you would like to live in.
3. Find out if you have enough money saved for the down payment as well as the closing costs.
4. Get a copy of your credit report.
5. Find out how big a mortgage you are qualified for. Also, explore loan options that are available to you.
6. Find an experienced realtor that you know and trust to help you through the entire process.



Qualifying for A Mortgage

There are many types of loans that are available out there, but the most popular is the FHA ( Federal Housing Administration) because its requirements are flexible, and often times buyers only need to pay 3.5% of the down payment. Below are the requirements for an FHA Loan:

• Ability to pay 3.5% down payment for people with credit scores of 580 and above, and 10% down payment for credit scores between 500-579)
• The credit score of 580
• In order to qualify for a loan, you should have at least 2 years of documented income either from the same company or at least in the same industry.

Understanding Your Credit Score

In America, your credit score is almost as important as money itself. But what is it? A credit score is an important number that creditors use to help them decide the likelihood that they will be repaid on time should they decide to give you a loan or credit. Your credit score can be anywhere between 300 to 850.

Down Payment and Closing Costs Programs?

Down payments and closing costs or the fees that have to be paid when the house has been purchased can be challenging for most people and can be the main cause of them being turned off from owning a home. Luckily, in America, there are some programs that offer people a chance to own their own homes.



The most popular are the following:

1. FHA Loan. This is a loan that's backed up by the Federal Housing. Requiring only 3.5% for the down payment, it is ideal for people who have lower credit scores.
2. VA Loans. This loan is backed up by the Department of Veteran Affairs and offers very low closing costs as well as a no downpayment requirement.
3. USDA Loan. This is a loan program that is guaranteed by the U.S. Department of Agriculture for borrowers in qualified rural areas.
4. Fannie Mar or Freddie Mac. This loan offers a 3 percent in closing cost assistance to first time buyers who have completed an educational course and have purchased a property that has been foreclosed by Freddie Mac.

Owning a home is scary and exciting at the same time, but with the right amount of knowledge and know- how as well as help from the right type of loan, brings your closer to calling your home your own.