Once you get into your home, if you don't have enough cash or you don't want to use all your cash up for any remodeling, Home Depot's credit card allows interest free financing for up to 24 months (depending on how much you spend) or even 12 months. You can pay that off before the promotion expired and keep your cash but get your flooring done or buy appliances. Just a thought!
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First, look to see if your state has any Programs that help with down payment assistance. There may be First Time Homebuyer's assistance for example. In Nevada, they have several programs where the State pays closing costs, they pay the down payment and it's not limited to first time buyers. The max income to quality for Nevada's program is $95k with a minimum credit score of 640. These prorams may have a higher interest rate but they give you free money to get into a home. Regarding down payments, if you put less than 20% down you will be charged PMI or mortgage insurance. This will be tacked onto your mortgage and will increase your monthly payments. Next, ask yourself how much you're willing to pay in mortgage payments every month. Not only that, but factor in utilities and possibly HOA fees. Water, Energy, Gas, Trash/Recycling, Internet should all be factored into your monthly payments. Keep in mind that depending where you live, your Energy bill mY have huge spikes from heavy use of AC or Heating. Also, once you buy there is a daunting realization that you have to be able to make this mortgage payment FOREVER (or unless you sell the property). So you have to be comfortable with the monthly mortgage payment. Next, Loan Type. Buyers accept offers in the following order: Cash, Conventional, FHA, VA . I recommend you go with a Conventional Loan. But definitely ask your lender about the differences. Also factor in how much remodeling you need to do. That will cost you! Oh also, you need to SEASON your money. That means, your money needs to sit in your accounts UNTOUCHED for several months while you look for a property. The lender will ask you for bank statements to see where your money is coming from and where it goes, while they determine if you are able to maintain a mortgage. That means no opening of any new credit accounts and no big purchases. CLOSING COSTS. This one surprised me. I was so focused on the down payment, I didn't realize you needed just as much in closing costs! Ok, you don't need a 20% payment in closing costs, but this is the point where everyone gets paid. So be prepared to set aside a couple THOUSAND dollars for closing costs. You can negotiate who covers these costs (seller, buyer) or you can split the costs. This is also used in the negotiating to buy, because sellers are prone to accept offers where Buyers pay closing costs. Well you're debt free so that is fantastic!!! The important thing to know is that you may be offered a big loan, but you must think of a monthly payment you are comfortable paying Evey month, even if. You lose your job. Since you are debt free, you should have no problem Saving for a 20% downpayment. You could probably get into a home sooner than 5yrs.
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