It is undoubtedly correct that there are distinct advantages of renting a home compared to buying a home. With home rentals Arizona, the tenants are not tied down to one place. Thus, renting a home allows more flexibility should you find a new job that requires you relocate. Further, during the first working years many Americans do not want to worry about the cost of property maintenance.
Therefore, millions of Americans are trapped in monthly rent cycles. This is owing to the rising cost of new homes, leaving many families unable to raise down payment and closing costs. Further, some Americans have a poor credit score owing to late rent payments and huge student loans. This affects their eligibility for a home loan, forcing them to remain in home rental AZ.
If you calculate the monthly rent cycles over a period of sixty years, buying a home becomes a cheaper option. If you are still trapped in monthly rent cycles, it is time you begin thinking about how to work your way out of the rent cycles into home ownership. In this post, I cover tips to help you track monthly rent cycles.
1. Keep Track of Rent Payments and Clear other Debts
Did you know that falling behind on monthly rent payments does affect your credit score? It is time you start to keep track of your rent payments or else you will be denied loans by the lenders. Set reminders to ensure debts, which include outstanding student’s loans, are paid on time. Ensuring you have paid all debts and that you keep track of bills helps to improve your credit worthiness.
2. Start Saving for Down Payments
Down payment has been found to be a huge factor blocking people from enjoying the benefits of homeownership. This can be attributed to the rising cost of houses, which is pushing the down payment higher. Therefore, raising the money to cover a down payment and the closing costs can be a major challenge.
You should not wait until you are in the market for a home to start saving for down payments. Open a savings account and start saving money that can be used to pay the down payment. Here are important tips to help you save enough money for mortgage down payment.
- Cut your expenses: the traditional approach to ensuring more savings is to reduce the amount you are spending. Therefore, review your monthly expenditure and cut on the non-essential expenses.
- Increasing your Revenue: another important strategy is to look for a part-time job so as to increase your income. This way, you can use the extra income to pay for the daily expenses, as you commit your paycheck to growing the savings account.
- Down Payment Gift Money: Friends, family and colleagues can contribute money helping you to afford a down payment. However, not all mortgage lenders will accept payments of down payment through gift money.
- Sell some asset: do you have an asset that you can dispose and earn money? Use that money to grow your savings account. Liquidating your assets is a good chance to grow the savings.
Therefore, use either of the above approaches to help you grow the savings account, in order to afford some cash for paying the down payment.
3. Find a Suitable Home Buying Programs in Arizona
There are different home buying programs in Arizona that can be used for funding a home purchase. The Arizona home buying programs can be categorized into government backed programs and the HomeReady conventional home loan. Let me take you through the different home buying programs to ensure you have a clear understanding of how they operate.
- Government Backed Home Buying Programs
The government backed home loans started as an initiative to help first time homebuyers. The loans target home buyers who cannot afford a high down payment or those who have a poor credit score, and so cannot qualify for the conventional home loan. The three alternatives include the FHA home loan, the VA home loan and the USDA home loan. The FHA home loan is backed by the federal government and allows borrowers with 3.5% as down payment to borrow a home. The VA home loan is available to the Veterans and their spouses. It is a no down payment home loan offered through the selected lenders, and it is backed by the Department of Veteran Affairs. The USDA home loan is backed by the United States Department of Agriculture and available to the buyers willing to purchase properties within the specific rural areas.
- HomeReady Conventional Loan
Offered by Fannie Mae, the HomeReady program is a low down payment program requiring as low as 3% down payment.
Therefore, to break from the monthly rent cycles, consider the options that I have highlighted here. Start saving money and ensure your credit score is good. The home buying programs that we have highlighted are ideal for first time homebuyers with a low credit score or those who cannot raise the 20% down payment to qualify for the conventional home loan.