Pros and Cons of Buying Versus Renting Home
In this blog, we will cover buying versus renting home. We will discuss the benefits of being a homeowner. Homeowners build equity as time passes. Every time homeowners make their mortgage payments, part of the mortgage payments goes towards principal paydown. With the combination of the principal paydown and the potential appreciation of the home’s value, the homeowner is building equity. A home is an investment. After the home mortgage gets paid off, the homeowner owns the home free and clear. Renters do not have the same benefits
Whenever a renter pays their monthly rent, that rent is an expense. Renters will never see the rent payment back. Landlords pay their mortgage payments from the rent payments paid by their renters. There are instances where a mortgage is less than a rental payment.
Qualifying For A Mortgage For First Time Home Buyers
I am sure you have heard the saying if there is a will, there is always a way. There are so many renters who believe there is no way they will ever be able to purchase a home. The first step to see if you qualify for a home purchase loan is to consult with a loan officer. The loan officer will qualify you and see what you qualify for. If you do not qualify for a loan now due to recent late payments and/or not meeting the minimum credit score requirements, the loan officer may have a plan for you on rebuilding your credit and boosting your credit scores. It is not if you qualify for a loan but when.
Is Buying a House Better Than Renting?
Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on government and conventional loans. Not all lenders have the same mortgage requirements on FHA, VA, USDA, and Conventional loans. All lenders need to meet the minimum agency mortgage guidelines. However, lenders can have higher lending requirements called lender overlays.
Buying Versus Renting Home For Veterans With Bad Credit
VA does not have a minimum credit score requirement. However, most lenders have a minimum credit score requirement of 620 credit scores. This credit score requirement on VA loans is called a lender overlay by the lender. This is why if you get denied for a mortgage by one lender does not mean that you cannot be approved by a different lender.
Qualifying For A Mortgage With Bad Credit
Borrowers can have prior bad credit, outstanding collections, charged-off accounts, and other derogatory credit tradelines and qualify for a mortgage. You can have prior bad credit and qualify for a mortgage if you have been timely on all of your debt payments in the past 12 months. Many renters believe that they need a large down payment and closing costs to qualify for a home purchase. Yet others believe that they need good credit and that outstanding collection and charge-off accounts would disqualify them for a mortgagee. This is not the case.
FHA Guidelines on Home Purchase
FHA Loans are the most popular loan program in the U.S. HUD 4000.1 FHA Handbook states all the FHA Guidelines for securing an FHA Loan. HUD, the parent of FHA and the agency that administers FHA loans has created lenient agency mortgage guidelines to promote homeownership in the United States. With the lenient FHA loan requirements, FHA loans are the best mortgage loan program for homebuyers with prior bad credit and low credit scores.
How Do Mortgage Lenders Define Bad Credit?
You can have prior bad care and credit scores down to 580 FICO and qualify for an FHA loan. If your credit scores fall lower than 580 FICO, HUD allows home buyers with credit scores down to 500 FICO to qualify for an FHA loan. However, if your credit scores are under 580 FICO, HUD requires homebuyers a 10% down payment versus a 3.5% down payment.
FHA Loans With Low FICO
580 FICO Credit Scores to qualify for a 3.5% down payment FHA Loan
Outstanding collections and charge-offs do not have to pay off to qualify.
How Does Seller Concessions Work In The Home Buying Process
Homebuyers can get 6% seller concessions from home sellers for closing costs. If short on seller concessions, lender credit by a lender can cover closing costs. 46.9% front end DTI, 56.9% DTI back end. Down payment can be 100% gifted. Non-Occupant Co-Borrowers allowed.
Mortgage After Bankruptcy and Foreclosure
2-Year Waiting Period After Chapter 7 Bankruptcy to qualify for FHA Loans. 3-Year Waiting Period After Recorded Date of deed in lieu of foreclosure or foreclosure to qualify for FHA Loans. 3 Year Waiting Period After Short Sale to qualify for FHA Home Loans
Borrowers under the Chapter 13 Bankruptcy Repayment Plan can qualify one year into their Chapter 13 Repayment with Trustee Approval. No Waiting Period After Chapter 13 Bankruptcy Discharged Date.
Top Reasons Why Renters Prefer Buying Versus Renting Home
Homeowners do not need permission from the landlord to make modifications to their homes. Renters need permission to paint a room, change appliances, re-tile floors, adopt pets, remodel the kitchen, remodel the bathroom, wallpaper rooms, plant vegetable gardens, and add a roommate. Another benefit of buying a home versus renting is that you have home security where you do not have to worry about every year whether or not your landlord will offer to renew your lease. A landlord can opt not to renew your lease and ask you to move out.
Concerns With Buying Versus Renting Home
Many renters fear the idea of buying a new home. Many renters feel do not understand the home buying process and believe that they need a substantial amount of money down and great credit scores. This article is geared toward renters. Renters need to come up with security deposits, first month’s and last month’s rent. Renters need to complete a rental application and most of them require credit checks.
Is A Mortgage Cheaper Than Rent?
Many renters do not realize that their monthly mortgage payments can be less than monthly rental payments. Many renters do not realize that they only need a 3.5% down payment on a new home purchase. Many renters do not realize that most home buyers do not have to come up with closing costs out of pocket. Closing costs can be covered by a seller’s concession or a lender’s credit
What Is The Best Mortgage Option For Poor Credit Scores?
Most renters do not realize that they can have poor credit scores and still qualify to purchase a home. Did you realize that you can still purchase a home even with prior bankruptcy? Did you know that you can buy a new home even with a prior foreclosure?
Can I Get an FHA Loan If I Have Unpaid Collections?
Did you know that you can still qualify for a home mortgage loan with open collections? As long as you have a steady monthly income, renters can qualify for a mortgage loan.
The Team at Gustan Cho Associates Mortgage Group are experts in helping first-time home buyers get a home mortgage with no lender overlays.
Is It Cheaper To Rent or Buy a Home?
Most landlords require a security deposit. Some landlords want a two or three-month security deposit. This security deposit can go towards the down payment of a new home. I have one client who is currently paying $1,250 per month for rent. I qualified him for a $140,000 mortgage loan.
What If I Am Entitled To a VA Loan But Have Bad Credit?
Since he is a veteran, he qualifies for a VA mortgage loan. He does not have the best credit scores and he does have open collections and high debt-to-income ratios. I just qualified him for a $140,000 VA mortgage loan. He has a purchase contract for a $140,000 single-family home. This client will get 100% financing due to his VA status.
Do Homebuyers Pay Closing Costs With a VA Loan?
No closing costs because VA allows 4% seller concessions. The only fee he needs to pay is the appraisal fee of $450.00 prior to closing which will get reimbursed. All of his closing costs are covered via seller’s concessions and by lender’s credit including the VA funding fee.
Can a New House Payment Be Lower Than a Rent Payment?
The best part of this deal is that his new mortgage payment which includes insurance and taxes will be $1,050 per month. In this particular case, it is a win-win situation where this client benefits from buying versus renting a home. Another plus with my client is that the $140,000 home he is purchasing used to be appraised for $240,000 three years ago. This client purchased this home at a very good price and the chances of appreciation are tremendous.
Become a Homeowner and Get Pre-Approved
Renters who want to qualify for a home loan, contact us at 1-262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
Buying Versus Renting.
