You're finally ready to make the dream purchase: a new home.
Ready to plant seeds in the yard and grow vegetables. Ready to sit on the porch and sip mint juleps. Or merely ready to lock the door, survey your digs and know you actually own the joint.
Now you just have to figure out how to make it work financially. You may have struggled in the first years out of college and maybe forgotten to pay a few debts off on time, so now your credit isn't so great. Or maybe you have great credit but no money saved up, even though you make a decent living at your job. Out of luck? Hardly.
Depending on whether you have great credit or so-so credit, enough for a down payment or little to pay up front, there are programs that can still make it possible for you to qualify for a loan and move a step closer to buying your first house.
Need a Down Payment?
If you're a bit shy of the down payment, take heart. Sometimes you can get the money you need through your job. If you contribute to a 401(k) retirement plan, you may be able to borrow from it to buy your house, as long as you pay it back into the account later on. Some companies offer programs to help their employees purchase their first home, so check out what your employer provides.
There are also federal agencies that can help you find more information on lending and mortgages. Although Fannie Mae and Freddie Mac do not make loans directly to homebuyers, they can help you find apporved lenders and help in the loan-finding process.
Have Bad Credit?
If you don't have the greatest credit in the world, other government agencies can help.
The Federal Housing Administration has a loan program that's set up for people with less than stellar credit. The interest rates may be a bit higher than loans you'd get through Fannie Mae or Freddie Mac, but the important thing is that you're able to borrow the money. And if you're unable to make a payment, the FHA will insure your mortgage and cover the payments you miss. But do this at your own risk because the FHA will then raise your monthly payments and require you to repay any money you borrow, plus interest, at then end of your mortgage term. You can find out more from FHA at www.hud.gov/fha.
You may also be able to get a loan from a private lender, like a bank, at a higher interest rate than they'd offer someone with spotless credit. This can work for you if you can afford to make the higher payments that will result from a higher interest rate. You can then try to refinance later.
So before you rule out affording a home of your own, check out these programs. Happy hunting.